For a Stretch Zone franchise, who else besides the owner may be required to execute the Guaranty?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a Business Entity, we recommend that one or more of the Franchise Owners participate personally in the direct operation of the Franchise Business, but we do not require any personal "on-premises" participation by a Franchise Owner. As discussed below, however, you must designate an individual to serve as your Regional Manager. At least one person must be a Certified Stretch Zone Practitioner. You are solely liable and responsible for the operation of the Franchise Business in accordance with the terms of the Franchise Agreement and the Operations Manual, regardless of whether you choose to operate the Franchise Business as a full-time owner/operator or hire another individual to serve as your Regional Manager. Under the Franchise Agreement and the Area Development Agreement, each owner of a direct or indirect interest in you of 20% or more must sign the applicable Guaranty attached as Exhibit G, under the terms of which those owners promise to be personally bound, jointly and severally, by all of the applicable agreement's provisions. In addition, at our request, the spouse of each guaranteeing owner (as applicable) will execute the Guaranty.
Source: Item 15 — ITEM -15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 62–64)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, if the franchisee is a business entity, any individual owning 20% or more of the entity must sign a Guaranty, promising to be personally bound by the Franchise Agreement's provisions. Additionally, at Stretch Zone's request, the spouse of each guaranteeing owner may also be required to execute the Guaranty. This requirement ensures that Stretch Zone has recourse to the personal assets of those with significant ownership and their spouses, providing an additional layer of security for the franchisor.
This requirement is fairly common in franchising, as franchisors often seek personal guarantees to ensure commitment and financial responsibility. By requiring owners with substantial equity and their spouses to sign the Guaranty, Stretch Zone aims to mitigate the risk of franchisee non-compliance or default. This also aligns the personal financial interests of the owners with the success of the Stretch Zone franchise.
Prospective franchisees should carefully review Exhibit G, which contains the Guaranty, to understand the full extent of the obligations. Franchisees should also consult with legal and financial advisors to assess the implications of providing a personal guarantee, as it could expose their personal assets to liability in the event of a breach of the Franchise Agreement. Understanding these requirements is crucial for anyone considering investing in a Stretch Zone franchise.