What constitutes a situation where loss, theft, substantial change, or destruction to a substantial portion of the collateral for a Stretch Zone franchise would trigger a warranty, and what are the acceptable remedies to avoid triggering the warranty?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
rms of insurance on the Collateral.
6. Events of Default.
The Franchisee/Debtor is in default under this Agreement upon the happening of any of the following events ("Events of Default"):
- (a) The occurrence of an Event of Default under the Franchise Agreement or any other document between the Franchisor/Secured Party and the Franchisee/Debtor; or
- (b) Loss, theft, substantial change or destruction to a substantial portion of the Collateral unless replaced immediately or covered by insurance.
Upon the happening of any Event of Default or whenever the Franchisor/Secured Party deems itself insecure for any reason, the Obligations become immediately due and payable. The Franchisee/Debtor expressly waives any presentment, demand, protest or other notice of any kind.
7. Franchisor/Secured Party's Remedies and Additional Rights After Default.
Upon the occurrence of an Event of Default, the Franchisor/Secured Party has the rights and remedies of a Franchisor/Secured Party under the Florida Uniform Commercial Code or any
other applicable law. The Franchisor/Secured Party may exercise the following rights and remedies:
- (a) The Franchisor/Secured Party may peaceably, or by its own means or with judicial assistance by injunction or otherwise, enter the Franchisee/Debtor's premises and take possession of the Collateral, or render it unusable, or dispose of the Collateral on the Franchisee/Debtor's premises, and the Franchisee/Debtor will not resist or interfere with this action.
- (b) The Franchisor/Secured Party may notify all account debtor's and other contracting parties of the Franchisor's/Secured Party's security interest in the accounts and demand payment directly to the Franchisor/Secured Party instead of paying the Franchisee/Debtor directly.
- (c) The Franchisor/Secured Party may, with judicial assistance by injunction or otherwise, require the Franchisee/Debtor, at the Franchisee/Debtor's expense, to assemble the Collateral and make it available to the Franchisor/Secured Party at any place designated by the Franchisor/Secured Party.
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, a franchisee is considered in default if there is loss, theft, substantial change, or destruction to a substantial portion of the collateral, unless it is immediately replaced or covered by insurance. This is considered an Event of Default.
Upon such an event, or if Stretch Zone deems itself insecure for any reason, all obligations of the franchisee become immediately due and payable. The franchisee waives any requirement for presentment, demand, protest, or other notice.
In the event of default, Stretch Zone has the rights and remedies of a secured party under the Florida Uniform Commercial Code or any other applicable law. Stretch Zone can enter the franchisee's premises to take possession of the collateral, render it unusable, or dispose of it. They can also notify the franchisee's account debtors and demand direct payment. Additionally, Stretch Zone can require the franchisee to assemble the collateral and make it available at a designated location, all at the franchisee's expense. Therefore, to avoid triggering a default event related to collateral, a Stretch Zone franchisee must ensure that any loss, theft, substantial change, or destruction to a substantial portion of the collateral is either immediately replaced or adequately covered by insurance.