Does the Stretch Zone franchise agreement allow franchisees to restrict Stretch Zone or other franchisees from using the Intellectual Property outside of the Limited Protected Territory?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
RANCHISE BUSINESS**
- (a) Existing Premises. You agree that you will operate your Franchise Business only at the Premises described in Section 18.1.
- (b) Premises to be Determined. If the Premises do not exist at the time the parties sign this Agreement, the Premises will be at a location that you select and we approve within the Site Selection Area. We will describe the approved location in the Approved Location Addendum to this Agreement (attached as Exhibit D to the FDD) that the parties will sign at that time.
- (c) Change in Location. You cannot change the location of the Premises without our written consent and your compliance with our relocation procedures.
Section 1.3 TERRITORIAL RIGHTS
We grant you a Limited Protected Territory that we define in Section 18.1 and designate on the Map attached as Exhibit A, if the Premises exist that we have approved. If the Business Premises do not exist at this time, we will describe the Limited Protected Territory in the Approved Location Addendum once you obtain a location that we approve. During the Initial Term, if you are not in default, we agree not to open the premises of a Company-Owned Unit within your Limited Protected Territory or franchise another Stretch Zone Franchise having premises located within your Limited Protected Territory, except for Non-Traditional Locations in the Protected Territory. This does not mean that there might not be overlap with a Company-Owned Unit's or another Franchised Unit's Limited Protected Territory as long as the premises of the Company-Owned Unit or the other Franchised Unit is not physically located in your Limited Protected Territory.
Section 1.4 RIGHTS THAT WE MAINTAIN
We (and any Affiliates that we may have from time to time) will, at all times, have the right to engage in any activities that we or they deem appropriate that are not expressly prohibited by this Agreement, whenever and wherever we or they desire, including, but not limited to:
- (a) establishing and operating, and granting rights to others to establish and operate, on any terms and conditions that we deem appropriate, Units (as applicable) at any locations outside the Limited Protected Territory and Non-Traditional Locations within or outside the Limited Protected Territory;
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, franchisees are limited in their ability to control the use of Stretch Zone's intellectual property by other franchisees or by the franchisor itself. While franchisees are granted a Limited Protected Territory, this protection primarily restricts the physical location of other franchised or company-owned Stretch Zone units. Specifically, Stretch Zone agrees not to open company-owned units or franchise another location within the franchisee's Limited Protected Territory during the initial term, provided the franchisee is not in default. However, this restriction does not prevent overlap with other units' territories as long as their physical premises are outside the franchisee's Limited Protected Territory.
Stretch Zone retains significant rights to operate as it sees fit, as outlined in Section 1.4. The franchisor reserves the right to engage in any activities not expressly prohibited by the agreement, whenever and wherever they desire. This includes the use of intellectual property. This clause underscores that the franchisee's rights are limited to the specific terms of the agreement, and Stretch Zone maintains broad discretion in its operations.
Furthermore, the franchisee's use of Stretch Zone's intellectual property is restricted to the operation of their franchise business at their specific premises. They cannot use the intellectual property in ways that could create liability for Stretch Zone or as security for any obligation. The franchisee must also use Stretch Zone's Principal Trademark as the sole service mark identification for their business and display it prominently as specified by Stretch Zone. These stipulations ensure that Stretch Zone maintains control over its intellectual property and brand representation, limiting the franchisee's ability to independently control or restrict its use.