What documents related to the security interest must a Stretch Zone franchisee sign?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) No Encumbrance. You will not use any of the Intellectual Property as security for any obligation or indebtedness.
- (e) Fictitious Name. You cannot use the Stretch Zone trade name as part of your legal business name. You must comply in filing and maintaining any required fictitious, trade or assumed name registrations for the "Stretch Zone" trade name for example, John Jones d/b/a "Stretch Zone" or ABC, Inc. d/b/a "Stretch Zone," and will sign all documents that we or our counsel deem reasonably necessary to obtain protection for the trademarks and our interest in the trademarks.
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)
The 2025 Stretch Zone Franchise Disclosure Document (FDD) stipulates that franchisees cannot use any of Stretch Zone's intellectual property as security for any obligation or indebtedness. However, the FDD does not specify any documents related to security interests that a franchisee must sign.
While the franchisee cannot use Stretch Zone's intellectual property as security, they may be required to sign documents to protect Stretch Zone's trademarks and interests in those trademarks. Specifically, the franchisee must comply with filing and maintaining any required fictitious, trade, or assumed name registrations for the "Stretch Zone" trade name. The franchisee will also sign all documents that Stretch Zone or its counsel deem reasonably necessary to obtain protection for the trademarks and Stretch Zone's interest in the trademarks.
Prospective Stretch Zone franchisees should seek clarification from the franchisor regarding any specific documents they will be required to sign related to security interests, especially concerning obligations or indebtedness. Understanding these requirements is crucial before entering into a franchise agreement.