If Stretch Zone assumes the lease, what liability does Stretch Zone indemnify the franchisee from?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
If we assume your lease, we will indemnify you from any ongoing liability under the lease that occurs after the date we assume possession of the Premises.
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 Stretch Zone's 2025 Franchise Disclosure Document, if Stretch Zone assumes a franchisee's lease, the franchisee is indemnified from any ongoing liability under the lease. This protection applies specifically to liabilities that arise after Stretch Zone takes possession of the premises.
This provision offers a significant safeguard for franchisees who may face challenges in meeting their lease obligations. By assuming the lease, Stretch Zone essentially steps into the franchisee's shoes, taking on the responsibility for rent payments and other lease-related expenses. This transfer of responsibility can be particularly beneficial if a franchisee is struggling financially or decides to exit the business.
However, it's crucial to understand that this indemnification only covers liabilities that occur after Stretch Zone assumes possession. The franchisee remains responsible for any outstanding lease obligations or defaults that occurred before the transfer. Therefore, franchisees should ensure that all lease payments are current and that the premises are in good condition before Stretch Zone takes over to avoid any potential disputes or liabilities.