Does the Stretch Zone franchise agreement require the franchisee to confirm they are not obtaining the franchise for speculative purposes?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 19.17 ACKNOWLEDGMENTS IN CERTAIN STATES
The following acknowledgements apply to all franchisees and Franchised Units, except those that are subject to the state franchise disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin:
- (a) You have conducted an independent investigation of the business venture contemplated by this Agreement and recognize that it involves business risks and that your results will be largely dependent upon your own efforts and ability. You have reviewed this Agreement and the FDD. You have been accorded ample time to consult with, and ask questions of, our representatives and to consult with your own legal counsel and other advisors about the potential risks and benefits of entering into this Agreement, and we have advised you to do so.
- (b) You have no knowledge of any representations made about the Stretch Zone franchise opportunity by us, our Affiliates, or any of our or their officers, directors, owners, or agents that are contrary to the statements made in the FDD or to the terms and conditions of this Agreement. You are not relying on any representations or warranties, express or implied, provided by us or our representatives other than those expressly set forth in this Agreement and the FDD.
- (c) Except as may be stated in the FDD, neither we, nor any of our Affiliates, nor any of our or our Affiliates' officers, agents, employees, or representatives have made any representation to you, express or implied, as to the historical revenues, earnings, or profitability of any Stretch Zone business or the anticipated revenues, earnings, or profitability of your Franchise Business or any other business operated by us, our licensees, our franchisees, or our Affiliates. Any information you have acquired from other Stretch Zone franchisees regarding their sales, profits or cash flows is not information obtained from us, and we make no representation about that information's accuracy.
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, excluding those in states with specific franchise disclosure laws, must acknowledge that they have conducted an independent investigation of the business venture and recognize the business risks involved. This acknowledgement is part of Section 19.17, titled "ACKNOWLEDGMENTS IN CERTAIN STATES," and it applies to all franchisees and franchised units except those subject to state franchise disclosure laws in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, or Wisconsin. This acknowledgement does not explicitly state that the franchisee is not obtaining the franchise for speculative purposes. However, it does require the franchisee to confirm they recognize the business risks involved.
Specifically, franchisees must acknowledge that their results will depend largely on their own efforts and abilities. They also confirm they have reviewed the Franchise Agreement and the FDD, and have had ample time to consult with representatives and advisors about the potential risks and benefits. Furthermore, franchisees acknowledge that they are not relying on any representations or warranties not expressly set forth in the Franchise Agreement and the FDD. This acknowledgement aims to ensure that franchisees enter the agreement with a clear understanding of the risks and responsibilities involved, based on their own due diligence and not solely on the franchisor's representations.
This type of clause is common in franchise agreements to protect the franchisor from future claims that the franchisee was misled or did not understand the risks. By requiring this acknowledgement, Stretch Zone aims to ensure that franchisees are making an informed decision and are prepared to take on the responsibilities of operating a franchise. Prospective franchisees should carefully review the entire Franchise Agreement and FDD, consult with legal and financial advisors, and conduct thorough due diligence before signing any agreements.