Does Stretch Zone's consent to a transfer waive any claims Stretch Zone may have against the franchisee?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Our consent to a transfer is not a waiver of any claims we may have against you. Our consent to a transfer is not a waiver of our right to demand the transferee's exact compliance with this Agreement. No transfer we approve relieves you of liability for your conduct before the transfer, including conduct in breach of this Agreement. You are relieved of all liability for your transferee's conduct after a permitted transfer except you remain obligated to comply with those provisions that expressly survive an expiration or termination of this Agreement including the obligations of indemnification, confidentiality and noncompetition.
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, Stretch Zone's consent to a transfer of the franchise does not constitute a waiver of any claims they may have against the franchisee. Furthermore, Stretch Zone's consent does not waive their right to demand the transferee's exact compliance with the Franchise Agreement.
This means that even if Stretch Zone approves a transfer, they retain the right to pursue any existing claims against the original franchisee. This protects Stretch Zone's interests by ensuring that past breaches or liabilities are not forgiven simply because the franchise ownership has changed hands.
Additionally, the original franchisee remains liable for their conduct before the transfer, especially if such conduct breached the Franchise Agreement. However, the franchisee is relieved of liability for the transferee's conduct after the transfer, except for obligations that expressly survive the termination or expiration of the agreement, such as indemnification, confidentiality, and noncompetition clauses. This clarifies the division of responsibility between the original franchisee and the new transferee, providing a clear understanding of their respective liabilities.