Is the monthly royalty fee for a Stretch Zone franchise refundable?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
not provide assistance with conforming the Business Premises to local ordinances and building codes and obtaining any required payments, and/or constructing, remodeling, or decorating the Business Premises, and/or hiring and, except for training required under this Agreement, training employees. These are your responsibility.
**ARTICLE 3
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 continuing monthly royalty fee is non-refundable. Franchisees must pay a royalty fee equal to 7% of gross revenues, with a minimum monthly payment of $900, beginning the first full calendar month after the opening date. The FDD emphasizes that this minimum royalty fee does not guarantee any specific level of gross revenues for the franchisee. This means that even if a Stretch Zone location performs poorly, the franchisee is still obligated to pay at least $900 in monthly royalty fees, and these fees will not be refunded.
This non-refundable aspect of the royalty fee is a significant factor for prospective Stretch Zone franchisees to consider. It means that regardless of the financial performance of the franchise, the royalty payments must be made. This is a common practice in franchising, as royalty fees represent ongoing compensation to the franchisor for the use of their brand, systems, and support. However, the minimum royalty fee adds a layer of financial obligation that franchisees must be prepared to meet, even during periods of low revenue.
Franchisees should carefully evaluate their financial projections and ensure they have sufficient capital to cover these ongoing royalty payments, especially during the initial months of operation when building a customer base. Understanding the non-refundable nature of the royalty fee is crucial for making an informed decision about investing in a Stretch Zone franchise. Prospective franchisees should discuss this aspect with existing franchisees and the franchisor to fully understand the implications and plan accordingly.