What determines the amount of transfer fees that Stretch Zone can collect?
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.
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)
Based on the 2025 Stretch Zone FDD, a franchisee will not be required to pay a transfer fee in one specific instance. If the franchisee assigns the agreement to a business entity in which they own a majority of the equity, no transfer fee is required. However, several conditions must be met for this exception to apply.
The franchisee or a regional manager must actively manage the business entity and dedicate their full time and effort to the franchise's daily operations. The business entity's name cannot include "Stretch Zone". The Board of Directors or Management Committee and the Shareholders or Members of the business entity must approve the assumption of the Franchise Agreement. An authorized officer or manager of the business entity must sign a document agreeing to be bound by all provisions of the agreement. All equity interest certificates must include a legend indicating they are subject to the terms of the Franchise Agreement, including transfer restrictions.
Even if the franchise agreement is transferred to a business entity under these conditions, the original franchisee remains personally liable for all monetary and non-monetary obligations under the agreement, both before and after the transfer, throughout the initial and any renewal terms. The FDD does not specify the transfer fee amount for other transfer scenarios, so prospective franchisees should inquire about the standard transfer fee and the conditions under which it applies.