Who benefits from the Stretch Zone Guaranty?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| by (the "Guarantor"). |
|---|
| INTRODUCTION |
| A. |
| Pursuant to a Stretch Zone Franchise Agreement dated as of |
| (the "Franchise Agreement"), Stretch Zone Franchising, LLC (the "Franchisor") is granting to |
| , a (the "Franchisee") the right to operate the Franchise |
| Business located at the address specified therein. |
| B. |
| The Guarantor represents and warrants to the Franchisor that s/he will benefit from |
| the Franchisee's execution of the Franchise Agreement. |
| C. |
| The Franchisor has declined to enter into the Franchise Agreement and other |
| related agreements (collectively, the "Agreements") with the Franchisee unless the Guarantor |
| signs and delivers this Guaranty to the Franchisor. |
| TERMS |
- (b) Guaranty. If you are a Business Entity, each Franchise Owner holding a direct or indirect interest of 20% or more in you will execute an agreement, in the form that we designate, undertaking to be personally bound, jointly and severally with such other guaranteeing Franchise Owners, by all provisions of this Agreement and any and all related agreements (a "Guaranty"), the current version of which is attached as Exhibit G to the FDD. In addition, at our request, the spouse of each such guaranteeing Franchise Owner (as applicable) will execute the Guaranty.
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 Guarantor warrants to the Franchisor that they will benefit from the Franchisee's execution of the Franchise Agreement. The Franchisor declines to enter into the Franchise Agreement without the Guarantor's signature and delivery of the Guaranty. If the franchisee is a business entity, each franchise owner holding a direct or indirect interest of 20% or more must execute a Guaranty, and at Stretch Zone's request, the spouse of each guaranteeing Franchise Owner will execute the Guaranty.
In essence, the Stretch Zone Guaranty ensures that the franchisor, Stretch Zone Franchising, LLC, receives assurance that the obligations under the Franchise Agreement will be met. This is particularly relevant when the franchisee is a business entity, as it extends personal liability to the owners of that entity. The franchisor benefits from having individuals personally bound to the agreement, increasing the likelihood of compliance and financial responsibility.
For a prospective Stretch Zone franchisee, this means that if you own 20% or more of a business entity that is a franchisee, you and potentially your spouse will need to sign a personal guarantee. This legally binds you to the financial and operational obligations of the franchise, even if the business entity fails. It is a common practice in franchising to have personal guarantees, as it provides the franchisor with an additional layer of security and recourse.