What happens if a Stretch Zone franchisee underreports financial information?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
ransfer pursuant to Sections 10.2, 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 signed by the parties: (i) you request our written consent to any action of yours and we consult our attorney; or (ii) we have our attorney prepare a letter, a Notice of Default or a Notice of Termination to you, then you agree to reimburse us for our attorneys' fees and costs under these circumstances.
- (j) Fines for Non-Compliance. If we find you to be in violation of certain terms of this Agreement constituting a material default by you that would entitle us to terminate the Franchise Agreement, we will send you a letter setting forth the nature of the non-complying act and what steps you must take to cure the violation. We will also impose a fine of $250, provided that, if the default involves the offer or sale of unauthorized or prohibited products, the fine is $500 per day until you
cease such offer or sale. You must immediately cure the violation and pay the fine within 10 days of receipt of our notice of non-compliance. If you fail to cure and pay the fine in a timely manner, we reserve the right to exercise our rights under ARTICLE 11. These acts of non-compliance include the following:
- (i) If we see an unauthorized product for sale at your Premises;
- (ii) If you use the Stretch Zone name and logo in an inappropriate way;
- (iii) If a person providing stretching service is not certified by us, a $250 fine will be issued for every day the person continues to provide stretching services;
- (iv) If we find that your employees are not in uniform or otherwise complying with our dress code - $200 fine; or
- (v) If you receive an inspection report from us that reveals material violation or our operating standards.
The Manuals contains further information on other types of violations that are subject to fines.
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)
I am unable to provide information from the 2025 FDD about the specific consequences a Stretch Zone franchisee might face for underreporting financial information. The provided excerpts do discuss fines for non-compliance with other terms of the agreement. For example, fines are mentioned for selling unauthorized products ($500 per day), inappropriate use of the Stretch Zone name and logo, employing uncertified stretching service providers ($250 per day per person), employees not adhering to the dress code ($200 fine), and material violations of operating standards found during inspections ($250 if unlisted).
However, the excerpts do not detail the specific penalties or actions Stretch Zone might take if a franchisee is found to have underreported financial data. It is important to note that the Royalty Fees, Technology Fees, training fees, Advertising Contributions and Fines are automatically billed and paid when are due by processing through the POS system.
A prospective Stretch Zone franchisee should ask the franchisor directly about the specific policies and procedures related to financial reporting and the consequences of underreporting. This information is crucial for understanding the financial obligations and potential risks associated with the franchise.