What is a Stretch Zone franchisee expected to do regarding their personal finances during the initial phase of operations?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- 19 Additional Funds. The franchise disclosure laws require us to include this estimate of any other required expenses you will incur to operate your franchise business during the "initial phase of operations," which is defined as a minimum of 3 months or a longer period if "reasonable for the industry." You should have adequate working capital before beginning operating the Franchise Business. You must be able to meet your operating expenses from pre-opening, including hiring and training expenses, until the Franchise Business develops sufficient cash flow to cover all costs. These figures do not include any payments to you during the initial phase of operations. You must have sufficient personal resources to cover your living expenses. You should work with your accountant to develop a personal/family cash flow budget and determine if there is sufficient revenue on the personal level to provide for your family through the initial phase of operations.
Source: Item 6 — ITEM -6 OTHER FEES (FDD pages 16–33)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, a franchisee must have sufficient personal resources to cover their living expenses during the initial phase of operations. The FDD defines the "initial phase of operations" as a minimum of 3 months, or longer if reasonable for the industry. Stretch Zone emphasizes that the estimated costs to begin operations do not include any payments to the franchisee during this period.
Stretch Zone advises prospective franchisees to develop a personal or family cash flow budget with their accountant. This budget should determine whether there is sufficient personal revenue to provide for the franchisee's family throughout the initial phase of operations. This is a critical step in assessing the financial viability of the franchise, as the business may not generate enough income to cover both business and personal expenses immediately.
In Item 6, the FDD includes an estimate for "Additional Funds" needed during the first three months of operation, ranging from $10,000 to $30,000. This figure is intended to cover operating expenses until the Stretch Zone business develops sufficient cash flow. However, this amount does not account for the franchisee's personal financial needs, highlighting the importance of separate personal financial planning. Therefore, a prospective franchisee needs to consider both the business's financial needs and their own personal financial obligations during the startup period.