In a Stretch Zone franchise transfer, does the transferee have to pay a new Initial Franchise Fee?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
to state law, any informal dispute resolution, | | | | mediation or arbitration proceeding must be conducted | | | | where our principal office is located when the demand is | | | | requested. Any litigation to enforce the Area | | | | Development Agreement must be filed in the courts | | | | where our principal office is located when litigation is | | | | filed (currently Broward County, Florida). | | w. Choice of law1 | Section 9.1 | Except to the extent governed by the United States | | | | Trademark Act of 1946, the United States Copyright Act | | | | or the United States Arbitration Act, , and subject to | | | | applicable state law, the Development Agreement is | | | | interpreted under the laws of Florida. |
| Provision | Section in Franchise Agreement | Summary |
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Source: Item 17 — ITEM -17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 65–73)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, a transferee in an approved franchise transfer will not have to pay a new initial franchise fee. However, the transferee must meet several conditions to be approved.
The conditions for approval include providing written notice to Stretch Zone, Stretch Zone not exercising their right of first refusal, and the transferor not being in default of any agreements with Stretch Zone. The transferee must also complete Stretch Zone's application procedures, be interviewed and approved by Stretch Zone, and sign a new franchise agreement. This new agreement may have materially different terms and conditions than the original agreement.
Additionally, either the transferor or the transferee must pay a transfer fee of $10,000. The transferee must also properly assume all of the transferor's obligations, including the lease. The transferor must sign a Franchise Termination and Release Agreement. Finally, the transferee must successfully complete Stretch Zone's Franchisee Training Program and other then-current training requirements, and both parties must sign Stretch Zone's transfer form.
It is important to note that the new franchise agreement signed by the buyer may contain materially different terms and conditions than the original contract. Prospective buyers should carefully review these terms and conditions and seek legal counsel to understand the implications before proceeding with the transfer.