Are a Stretch Zone franchisee's obligations under the Franchise Agreement secured?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| THIS FRANCHISE TERMINATION AND RELEASE AGREEMENT (this "Agreement") is signed and effective on (the "Effective Date") among Stretch Zone Franchising, LLC, as the Franchisor ("we," "us," "our," or "Franchisor"); LLC, a limited liability company, ("Franchisee"); and |
|---|
| ("Guarantor"). |
| BACKGROUND |
| A. |
| We and Franchisee entered into a Stretch Zone Franchise Agreement dated |
| and |
| certain |
| ancillary |
| documents |
| thereto |
| (collectively, |
| the |
| "Franchise |
| Agreement"), under which we granted and Franchisee accepted a Stretch Zone Franchise at |
| (the "Franchise Business"). |
| B. |
| Franchisee's obligations under the Franchise Agreement and other agreement with us |
| are |
| guaranteed |
| by |
| Guarantor |
| under |
| the |
| Guaranty |
| of |
| Franchisee's |
| Obligations |
| dated |
| (the "Guaranty"). |
Source: Item 2 — Obligations Secured. (FDD page 263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, a franchisee's obligations under the Franchise Agreement are guaranteed. Specifically, the Franchise Termination and Release Agreement states that the franchisee's obligations under the Franchise Agreement and other agreements with Stretch Zone are guaranteed by a Guarantor under the Guaranty of Franchisee's Obligations.
This means that a third party, known as the Guarantor, is responsible for ensuring that the franchisee fulfills their financial and operational responsibilities as outlined in the Franchise Agreement. This arrangement provides Stretch Zone with an added layer of security, as they have recourse to the Guarantor's assets or financial standing if the franchisee fails to meet their obligations.
For a prospective Stretch Zone franchisee, this implies that someone with sufficient financial means and a willingness to guarantee the franchisee's performance must sign a guaranty. This could be a spouse, business partner, or other individual willing to take on this responsibility. Franchisees should carefully consider the implications of this requirement and ensure they have a suitable Guarantor before entering into the Franchise Agreement.