For Stretch Zone franchisees, under what condition are all fees paid to the franchisor deferred?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
MARYLAND ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT
- Based on our financial information submitted, the Maryland Commissioner of the Securities Division has imposed a deferral of initial fees until we have performed all of our preopening obligations and you are open for business,
ITEM 5 is amended to add the following applicable language to the end of the applicable section of Item 5:
INITIAL FEES
All fees paid to the Franchisor by the Franchisee, including payments for goods and services received from the Franchisor before the business opens, shall be deferred pending satisfaction of all of the Franchisor's pre-opening obligations to the Franchisee.
INITIAL CONTRIBUTION TO MEDIA FUND
The initial Advertising Contribution will be deferred and is not payable to us until we have complied with all of our pre-opening obligations to you under the Franchise Agreement and you are open for business.
DEVELOPMENT FEE
In addition, all Development Fees and initial payments by Developers shall be deferred until the first Franchise under the Area Development Agreement opens.
- ITEM 17(c)(7) is amended to add the following sentence:
The Franchise Termination and Release Agreement required as a condition of renewal, sale and/or assignment/transfer does not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
- ITEM 17(h) is amended to add the following sentence:
The provision in the Franchise Agreement that provides for termination upon your bankruptcy may not be enforceable under federal bankruptcy law (11 U.S.C. Section 101 et seq.).
- ITEM 17(m)(3) is amended to add the following sentence:
The Franchise Termination and Release Agreement required as a condition of renewal, sale and/or assignment/transfer does not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
- ITEM 17(u) is amended to add the following sentence:
The Franchise Agreement and Area Development Agreement provide that disputes are resolved through arbitration.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 91–99)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, in certain states, all fees paid to Stretch Zone by the franchisee are deferred under specific conditions. In Maryland and Minnesota, based on the franchisor's financial information, the respective state departments have imposed a deferral of initial fees. This deferral lasts until Stretch Zone has fulfilled all of its pre-opening obligations to the franchisee and the franchisee is open for business. This includes payments for goods and services received from Stretch Zone before the business opens.
Furthermore, the Development Fees and initial payments by Developers are also deferred. These fees are deferred until the first franchise under the Area Development Agreement is opened. This means that franchisees in these states do not have to pay these initial fees until Stretch Zone has met its obligations and the business is operational.
This deferral of fees can be a significant benefit for new Stretch Zone franchisees in Maryland and Minnesota, as it reduces the upfront financial burden. It also provides some assurance that Stretch Zone is committed to supporting the franchisee through the opening process. However, it is important to note that the fees are only deferred, not waived, and will eventually need to be paid once the conditions are met.
Prospective franchisees should carefully review the specific language in the Maryland and Minnesota addenda to the Franchise Disclosure Document to fully understand the terms and conditions of the fee deferral. They should also consult with a franchise attorney to ensure they understand their rights and obligations.