What expenses can Stretch Zone deduct from the proceeds of a sale of the collateral?

According to Stretch Zone's 2025 Franchise Disclosure Document, Stretch Zone, as the Franchisor/Secured Party, can deduct specific expenses from the gross proceeds of any public or private sale of the collateral. These deductible expenses include any broker's commission and reasonable attorneys' fees. Additionally, Stretch Zone can deduct legal expenses, encompassing appellate, bankruptcy, and post-judgment proceedings. These expenses must be incurred or expended by Stretch Zone in connection with the Franchise Agreement and other agreements involving the collateral.

These deductions also extend to the enforcement of any obligations, as well as the administration, preservation, protection, or realization upon the collateral or any part of it. After deducting these expenses, any remaining amount will be returned to the Franchisee/Debtor. This provision ensures that Stretch Zone can recover costs associated with the sale of collateral due to franchisee default or other circumstances necessitating the sale of secured assets.

It is important for a prospective Stretch Zone franchisee to understand these terms, as they outline the financial responsibilities and potential deductions in the event of a collateral sale. Franchisees should seek legal counsel to fully understand the implications of these clauses and how they might affect their investment and financial obligations under the Franchise Agreement. This level of detail is typical in franchise agreements to protect the franchisor's interests in the event of franchisee default or non-compliance.