What happens if a Stretch Zone franchisee attempts to transfer the Franchise Agreement in violation of the agreement's terms?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
2, 10.3, and 10.4, except for a transfer in accordance with Section 10.2(b), you will pay us a fee in the amount of $10,000 (the "Transfer Fee").
- (h) Renewal Fee. Shortly before the expiration of the Initial Term, if you decide to obtain a Renewal Franchise Agreement in accordance with Subsection 16.2(a), you must pay us a Renewal Fee equal to 50% of the then-current Initial Franchise Fee.
- (i) Our Attorneys' Fees. If after the Franchise Agreement is s
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)
The 2025 Stretch Zone Franchise Disclosure Document does not explicitly state the consequences of a franchisee attempting to transfer the Franchise Agreement in violation of its terms. However, the document does state that if Stretch Zone finds a franchisee to be in violation of certain terms of the agreement, constituting a material default, Stretch Zone will send a letter outlining the non-complying act and the steps required to cure the violation.
Additionally, Stretch Zone may impose a fine of $250 for non-compliance. However, if the default involves the offer or sale of unauthorized or prohibited products, the fine increases to $500 per day until the franchisee ceases such offer or sale. The franchisee must cure the violation and pay the fine within 10 days of receiving notice. Failure to do so gives Stretch Zone the right to exercise its rights under ARTICLE 11.
Since the FDD does not specifically address unauthorized transfers, it is important for a prospective franchisee to seek clarification from Stretch Zone regarding the specific penalties or actions that may be taken if a franchisee attempts to transfer the Franchise Agreement without proper authorization or in violation of the agreement's terms. This information is crucial for understanding the full scope of obligations and potential repercussions associated with the franchise agreement.