Does the expiration or termination of the Stretch Zone Franchise Agreement affect the franchisee's obligations under Section 8.15?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Your obligations under this Section 14.2 will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination.
- (c) Despite Section 14.2(a), you have no obligation to indemnify or hold harmless an Indemnified Party for, and we will reimburse you for, any Losses (including costs of defending any Proceeding under Section 14.2(b)) to the extent they are determined in a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction to have been caused solely and directly by the Indemnified Party's willful misconduct or gross negligence, so long as the claim to which those Losses relate is not asserted on the basis of theories of vicarious liability (including agency, apparent agency, or joint employer) or our failure to compel you to comply with this Agreement, which are claims for which you are not entitled to indemnification pursuant to this Section 14.2(c).
However, nothing in this Section 14.2(c) limits your obligation to defend us and the other Indemnified Parties under Section 14.2(b).
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 Franchise Disclosure Document, the franchisee's obligations under Section 14.2 continue even after the agreement expires or is terminated. Specifically, the document states, "Your obligations under this Section 14.2 will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination."
This means that certain responsibilities and duties a Stretch Zone franchisee has during the term of the agreement will not automatically end when the franchise agreement concludes. These obligations remain enforceable, ensuring that both Stretch Zone and the franchisee continue to adhere to specific terms, even after the formal agreement period.
However, the franchisee has no obligation to indemnify or hold harmless an Indemnified Party for any losses caused solely and directly by the Indemnified Party's willful misconduct or gross negligence, so long as the claim to which those Losses relate is not asserted on the basis of theories of vicarious liability. This exception provides a degree of protection to the franchisee in cases where Stretch Zone's actions directly lead to losses, under specific conditions. This exception does not limit the franchisee's obligation to defend Stretch Zone and other Indemnified Parties.