Does the Stretch Zone franchise agreement consider relationships with prospective customers a legitimate business interest?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| THIS ASSIGNMENT AGREEMENT is signed on between Stretch Zone Franchising, LLC, a Florida limited liability company ("we," "us" or "our") and ("you" or "your"). |
|---|
| BACKGROUND |
| A. |
| The parties are entering into a Stretch Zone Franchise Agreement on |
| (the "Franchise Agreement"). |
| B. |
| As a condition to signing the Franchise Agreement, we have required that you |
| assign to us all of your right, title and interest in the telephone numbers, telephone listings, |
| facsimile numbers, and telephone directory advertisements relating to the Stretch Zone |
| Franchise (the "Franchise Business") upon the expiration or termination of the Franchise |
| Agreement |
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)
Based on the 2025 Stretch Zone Franchise Disclosure Document, the franchise agreement includes an assignment agreement that requires franchisees to assign their rights, titles, and interests in telephone numbers, listings, fax numbers, and directory advertisements related to the Stretch Zone franchise to the franchisor upon the agreement's expiration or termination. This indicates that Stretch Zone recognizes the value and importance of these relationships and assets developed during the franchise term. By securing the rights to these assets, Stretch Zone aims to maintain continuity and control over customer relationships and marketing channels even after a franchise agreement ends.
This requirement ensures that Stretch Zone can continue to market to existing customers and maintain a consistent brand presence in the local market. For a prospective franchisee, this means that upon termination or expiration of their franchise agreement, they will not be able to directly leverage the phone numbers, listings, and advertisements they used during their operation. This could impact their ability to start a similar business in the same area immediately following the end of their Stretch Zone franchise.
However, the FDD does not explicitly state whether Stretch Zone considers relationships with prospective customers a legitimate business interest. While the assignment agreement covers specific assets like phone numbers and listings, it does not directly address the broader concept of customer relationships or data. A prospective franchisee should seek clarification from Stretch Zone regarding how they define and treat customer relationships, particularly concerning data ownership, marketing rights, and non-compete obligations after the franchise agreement concludes. Understanding these aspects is crucial for assessing the long-term value and potential limitations of the franchise.