Are matters involving actions that may impair the goodwill associated with the Stretch Zone Intellectual Property subject to the obligations set forth in Sections 17.1 to 17.3?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
This arbitration provision is self-executing and remains in full effect after the expiration, transfer or termination of this Agreement.
Section 17.4 EXCEPTIONS TO MEDIATION AND ARBITRATION; EQUITABLE RELIEF
- (a) Exceptions. The obligations set forth in Sections 17.1 to 17.3 are not binding on either party for: (i) claims involving the Intellectual Property; (ii) claims involving any lease of real property between the parties or their related entities; (iii) your obligations upon the termination, transfer or expiration of this Agreement; (iv) any encumbrances or transfers restricted under this Agreement concerning interests in the Franchisee, the Franchise Business and this Agreement; (v) matters involving actions that may impair the goodwill associated with the Intellectual Property; (vi) matters involving claims of danger, health or safety involving the Franchise, the employees, customers or the public; or (vii) requests for restraining orders, injunctions or other procedures in a court of competent jurisdiction to obtain specific performance when deemed necessary by any court to preserve the status quo or prevent irreparable injury pending resolut
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, matters involving actions that may impair the goodwill associated with the Stretch Zone Intellectual Property are explicitly excluded from the obligations outlined in Sections 17.1 to 17.3. These sections likely pertain to mediation and arbitration, as indicated by the title of Section 17.4, which states 'EXCEPTIONS TO MEDIATION AND ARBITRATION; EQUITABLE RELIEF.'
This means that Stretch Zone retains the right to pursue legal action or other equitable remedies without first being required to engage in mediation or arbitration for issues concerning actions that could harm the goodwill of its intellectual property. This provision protects Stretch Zone's brand and reputation, allowing them to act swiftly against any franchisee whose actions could damage the brand's image or value.
For a prospective Stretch Zone franchisee, this signifies that Stretch Zone takes its intellectual property rights seriously and will act decisively to protect them. While mediation and arbitration are common first steps in resolving franchise disputes, Stretch Zone reserves the right to bypass these steps when it comes to protecting its intellectual property. This could mean facing immediate legal action if a franchisee's actions are deemed detrimental to the brand's goodwill.