When is the Stretch Zone Development Fee paid, and is it refundable?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 3.1 of the Area Development Agreement is amended as follows:
SECTION 3.1 DEVELOPMENT FEE
In addition, all Development Fees and initial payments by Developers shall be deferred until the first Franchise under the Area Development Agreement opens.
Section 3.1 of the Area Development Agreement is amended as follows:
SECTION 3.1 DEVELOPMENT FEE
In consideration of the rights granted to you, you will not pay to us the Development Fee until we have complied with all of our pre-opening obligations to you under a Franchise Agreement for the 1st Franchise Business and you are open for business.
Section 3.1 of the Area Development Agreement is amended as follows:
SECTION 3.1 DEVELOPMENT FEE
In consideration of the rights granted to you, you will pay to us a Development Fee when we have complied with all of our pre-opening obligations to you under the Development Agreement and the Franchise Agreement for the 1st Franchise Business, and you are open for business. This is in addition to the deferral of the Initial Franchise Fee for the 1st Franchise Business.
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 standard policy is that the Development Fee is paid in consideration for the rights granted to the developer. However, the timing of this payment can vary based on specific addenda for certain states.
For instance, the Minnesota Addendum states that all Development Fees and initial payments by developers are deferred until the first franchise under the Area Development Agreement opens. Similarly, the Hawaii Addendum specifies that the Development Fee is not due until Stretch Zone has fulfilled all pre-opening obligations under the Franchise Agreement for the first franchise business, and the franchisee is open for business. The Illinois Addendum also states that the Development Fee is paid when Stretch Zone has complied with all pre-opening obligations and the franchisee is open for business.
These addenda indicate that the payment of the Development Fee is contingent upon Stretch Zone meeting its pre-opening obligations and the franchisee commencing operations, which could be more favorable for franchisees in those states compared to a standard agreement requiring upfront payment. The excerpts do not specify whether the development fee is refundable.