What does the Stretch Zone Franchisor agree to do with the financial statements provided by the Guarantor?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
At any time this Guaranty is in effect, Guarantor will, upon 7-days prior written notice from the Franchisor, provide the Franchisor with a current financial statement and such other financial information as the Franchisor may reasonably request (including copies of Guarantor's filed federal and state income tax returns for the most recent taxable year).
The Franchisor agrees to keep confidential and not use such financial statements and information, except in connection with the administration or enforcement of the Franchise Agreement or this Guaranty.
The financial statements must be prepared in accordance with generally accepted accounting principles.
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 Franchise Disclosure Document, the franchisor agrees to specific terms regarding the financial statements provided by the Guarantor. Upon 7-days prior written notice from Stretch Zone, the Guarantor must provide the franchisor with a current financial statement and any other financial information that Stretch Zone may reasonably request, including copies of the Guarantor's filed federal and state income tax returns for the most recent taxable year. The financial statements must be prepared in accordance with generally accepted accounting principles.
Stretch Zone agrees to keep the Guarantor's financial statements and information confidential. Furthermore, Stretch Zone will not use the financial statements and information, except when it is connected with the administration or enforcement of the Franchise Agreement or the Guaranty.
This agreement ensures that the financial information is protected and only used for necessary purposes related to the franchise agreement and guarantee. This is a fairly standard practice in franchising, as franchisors often require financial information to assess the financial stability of franchisees and guarantors, but they also have a responsibility to protect that information.