What is deferred regarding the Stretch Zone Initial Franchise Fee?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
under the North Dakota Franchise Investment Law. Arbitration involving Area Development Rights purchased in the State of North Dakota must be held either in a location mutually agreed upon before the arbitration or if the parties cannot agree on a location, the arbitrator will determine the location.
- (e) If the Area Development Agreement requires payment of a termination penalty, the requirement may be unenforceable under the North Dakota Franchise Investment Law.
- (f) Any provision in the Area Development Agreement which requires you to consent to a waiver of exemplary and punitive damages will not apply to any claims brought under the under the North Dakota Franchise Investment Law.
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- Each provision of this Amendment is effective only to the extent that the jurisdictional requirements of the North Dakota Franchise Investment Law as to each provision are met independent of this Addendum. A provision has no force or effect if the jurisdictional requirements
are not met independent of this Addendum. If this Addendum is inconsistent with any terms of the Area Development Agreement, the terms of this Addendum govern.
Each of the undersigned acknowledges having read this Addendum, understands and consents to be bound by all of its terms.
| FRANCHISOR: | DEVELOPER: | |
|---|---|---|
| STRETCH ZONE FRANCHISING LLC, a | (IF ENTITY): | |
| Florida limited liability |
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 FDD, the initial franchise fee of $59,500 is deferred until Stretch Zone has met all pre-opening obligations to the franchisee, and the franchisee is open for business. This deferral is offered to franchisees currently purchasing a franchise. This arrangement means a new Stretch Zone franchisee does not have to pay the initial franchise fee upfront. Instead, the payment is delayed until Stretch Zone has fulfilled its pre-opening responsibilities and the franchise location is ready to begin operations.
This deferral of the initial franchise fee could significantly reduce the initial financial burden on new Stretch Zone franchisees. It allows them to allocate their capital to other essential startup costs, such as location build-out, equipment, and initial marketing expenses. This can be particularly beneficial for franchisees who may have limited access to capital or prefer to manage their cash flow carefully during the initial stages of the business.
However, it is important for prospective Stretch Zone franchisees to understand exactly what constitutes Stretch Zone's "pre-opening obligations." These obligations should be clearly defined in the Franchise Agreement to avoid any misunderstandings or disputes. Franchisees should also confirm the timing and conditions under which the initial franchise fee becomes due to ensure they are prepared to make the payment once the deferral period ends.
Overall, the deferred initial franchise fee represents a potentially favorable term for new Stretch Zone franchisees, as it alleviates some of the upfront financial pressure associated with starting a franchise. However, franchisees should carefully review the terms and conditions of the deferral to ensure they fully understand their obligations and the franchisor's responsibilities.