What constitutes an Event of Default for a Stretch Zone franchisee regarding relocation?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
nfringe upon the Limited Protected Territory of a Company-Owned Unit or another Franchise Unit then operating or under development. We must approve the new location in writing in accordance with Section 2.1. During the period when your Franchise Business is not in operation due to the relocation of the Premises, you are not required to spend the minimum Local Advertising Contributions. You have 60 days from the date you sign a new lease in which to open and begin operating the Franchise Business, unless we otherwise agree in writing to extend the time. Your failure to secure a new location and begin operation within the specified times is an Event of Default on your part.
- (b) Casualty. If the Premises are substantially destroyed by fire or other casualty, we permit you 30 days to obtain new Premises within your Limited Protected Territory. The relocated Premises must not infringe upon the Limited Protected Territory of a Company-Owned Unit or another Franchised Unit then operating or under development. We must approve the new location in writing in accordance with Section 2.1. During the period when your Franchise Business is not in operation due to the relocation of the Premises, you are not required to spend the minimum Local Advertising Contributions. You have 60 days from the date you sign the new lease in which to open and begin operating the Franchise Business, unless we otherwise agree in writing to extend the time. Your failure to secure a new location and begin operation within the specified times is an Event of Default on your part.
- (c) Condemnation. You will give us notice of any proposed taking of the Premises by eminent domain, as soon as possible. We permit you 30 days from the date you have to vacate the Premises to obtain new Premises within your Limited Protected Territory. The relocated Premises must not infringe upon the Limited Protected Territory of a Company-Owned Unit or another Franchised Unit then operating or under development. We must approve the new location in writing in accordance with Section 2.1. During the period when your Franchise Business is not in operation due to the relocation of the Premises, you are not required to spend the minimum Local Advertising Contributions. You have 60 days from the date you sign the new lease in which to open and begin operating the Franchise Business, unless we otherwise agree in writing to extend the time. Your failure to secure a new location and begin operation within the specified times is an Event of Default on your part.
- (d) Relocation Fee. If you must relocate your Franchise Business, you will reimburse us for our costs incurred in assisting you with relocation plus pay us a relocation fee of $1,000.
ARTICLE 2 - OUR DUTIES
We will provide you with the following initial and ongoing assistance and services, as long as you are not in default under this Agreement:
Section 2.1 SITE SELECTION ASSISTANCE
- (a) Our Approval of Site. You must obtain our written approval of the proposed site for the Premises for your Franchise Business before you sign a lease or begin any construction.
- (b) Site Selection Criteria.
Source: Item 12 — ITEM -12 TERRITORY (FDD pages 54–58)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, a franchisee faces an Event of Default if they fail to secure a new location and begin operation within specified timeframes following certain triggering events that necessitate relocation. These events include the loss of lease, substantial destruction of the premises due to casualty (like fire), or condemnation of the premises through eminent domain. In each of these scenarios, Stretch Zone grants the franchisee 30 days to obtain new premises within their Limited Protected Territory.
To avoid default, the relocated premises must not infringe upon the Limited Protected Territory of a Company-Owned Unit or another Franchised Unit already operating or under development. The franchisor, Stretch Zone, must approve the new location in writing, adhering to Section 2.1 of the Franchise Agreement. During the relocation period, the franchisee is not required to spend the minimum Local Advertising Contributions.
Following the signing of a new lease, the franchisee has 60 days to open and begin operating the Franchise Business, unless Stretch Zone agrees in writing to extend this timeframe. Failure to meet these deadlines—securing a new location within 30 days of the triggering event and commencing operations within 60 days of signing the new lease—constitutes an Event of Default under the Franchise Agreement. This could potentially lead to termination of the agreement and loss of the franchise.