When must the balance of the Initial Franchise Fee be paid to Stretch Zone for each Franchise Business to be developed?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 5 is amended by adding the following applicable language to the end of the applicable section of Item 5:
INITIAL FRANCHISE FEE
The Initial Franchise Fee will be deferred and is not payable to us until we have complied with all of our pre-opening obligations to you under the Franchise Agreement and you have begun doing business.
INITIAL CONTRIBUTION TO MEDIA FUND
The initial Advertising Contribution will be deferred and is not payable to us until we have complied with all of our pre-opening obligations to you under the Franchise Agreement and you are open for business.
DEVELOPMENT FEE
Because Franchisor has material pre-opening obligations with respect to each Franchise Business the Franchisee opens under the Area Development Agreement, payment of the Development Fee will be released proportionately with respect to each Franchise Business opened and is deferred until the Franchisor is met all its pre-opening obligations under the Franchise Agreement and Franchisee is open for business with respect to each such location.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, the initial franchise fee is deferred until Stretch Zone has met all pre-opening obligations to the franchisee under the Franchise Agreement, and the franchisee has begun doing business.
For franchisees entering into an Area Development Agreement with Stretch Zone, the development fee is also deferred. Payment is released proportionately for each franchise business opened, but only after Stretch Zone has fulfilled all pre-opening obligations outlined in the Franchise Agreement, and the franchise location is open for business.
This deferred payment structure is a significant benefit for prospective Stretch Zone franchisees. It reduces the upfront financial burden and aligns the payment of fees with the actual commencement of business operations. This arrangement also provides some assurance that Stretch Zone is committed to supporting the franchisee through the pre-opening phase, as they only receive payment once their obligations are met and the business is operational.