Is a Stretch Zone franchisee required to spend the minimum Local Advertising Contributions during the period when their Franchise Business is not in operation due to relocation after a loss of lease?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Loss of Lease. If you lease the Premises and the lease expires or terminates before the expiration of this Agreement (provided termination is not due to your default), we permit you 30 days to obtain new Premises within your Limited Protected Territory. The relocated Premises must not infringe upon the Limited Protected Territory of a Company-Owned Unit or another Franchise Unit then operating or under development. We must approve the new location in writing in accordance with Section 2.1. During the period when your Franchise Business is not in operation due to the relocation of the Premises, you are not required to spend the minimum Local Advertising Contributions. You have 60 days from the date you sign a new lease in which to open and begin operating the Franchise Business, unless we otherwise agree in writing to extend the time. Your failure to secure a new location and begin operation within the specified times is an Event of Default on your part.
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 FDD, a franchisee is not required to spend the minimum Local Advertising Contributions during the period their franchise is not in operation due to relocation after a loss of lease. If a Stretch Zone franchisee's lease expires or terminates (provided it is not due to the franchisee's default), Stretch Zone allows the franchisee 30 days to secure new premises within their Limited Protected Territory. The new location is subject to Stretch Zone's approval and must not infringe upon the territory of other units.
During this relocation period, the franchisee is relieved of the obligation to spend the minimum on local advertising. The franchisee then has 60 days from signing a new lease to open and begin operating the franchise, unless Stretch Zone agrees to an extension in writing. Failure to secure a new location and resume operations within the specified timeframe constitutes an event of default on the franchisee's part.
This policy provides some financial relief to Stretch Zone franchisees during an unexpected and potentially costly relocation process. However, franchisees should be aware of the strict timelines for securing a new location and resuming operations to avoid defaulting on their franchise agreement.