What is the condition regarding the collection of transfer fees for a Stretch Zone franchise?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
You will not be required to pay us a Transfer Fee in connection with a transfer in accordance with this Section 10.2(b). You understand that, if you transfer this Agreement to a Business Entity, you remain personally liable for all the monetary and non-monetary obligations under this Agreement arising before or after the transfer through the end of the Initial Term and any Renewal Term.
- (h) Transfer Without Our Consent. Any attempted transfer by you without our prior written consent or otherwise not in compliance with the terms of this Agreement is void. We will consider that your interest in this Agreement has been voluntarily abandoned giving us the right to elect either to deem you in non-curable default and terminate this Agreement or to collect from you and the Guarantors a fee equal to 2 times the Transfer Fee.
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 Stretch Zone's 2025 Franchise Disclosure Document, a transfer fee is not required when assigning the Franchise Agreement to a business entity under specific conditions. These conditions include the franchisee or a Regional Manager actively managing the business, the business entity not using the "Stretch Zone" trade name, approval from the entity's Board of Directors and Shareholders, and an authorized officer signing an agreement to be bound by the Franchise Agreement. Even with the transfer to a business entity, the franchisee remains personally liable for all monetary and non-monetary obligations under the agreement arising before or after the transfer, through the end of the initial and any renewal terms.
However, if a franchisee attempts to transfer the agreement without prior written consent from Stretch Zone or does not comply with the terms of the agreement, the attempted transfer is considered void. In such cases, Stretch Zone can consider the franchisee's interest in the agreement voluntarily abandoned. This gives Stretch Zone the right to either deem the franchisee in non-curable default and terminate the agreement or collect from the franchisee and any guarantors a fee equal to two times the standard transfer fee.
This policy encourages franchisees to adhere to the proper transfer protocols established by Stretch Zone, while also providing some flexibility for franchisees who wish to operate their franchise through a business entity without incurring additional transfer fees, provided they meet specific operational and management criteria. It also protects Stretch Zone's interests by ensuring that unauthorized transfers are discouraged and penalized, maintaining control over who operates a Stretch Zone franchise and upholding brand standards.