What is the name of the document a Stretch Zone franchisee must sign if the franchise agreement is terminated?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (iii) The Board of Directors (Management Committee) and Shareholders (Members) of the Business Entity approve the assumption of this Agreement, authorize an officer or manager to sign a joinder agreement or assumption of this Agreement and appoint a Designated Representative.
- (iv) An authorized officer (manager) of the Business Entity signs a document in a form we approve, agreeing to become a party bound by all the provisions of this Agreement;
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 FDD, if a franchisee transfers their agreement to a business entity, an authorized officer or manager of the business entity must sign a document, in a form approved by Stretch Zone, agreeing to become a party bound by all the provisions of the Franchise Agreement. This requirement ensures that the business entity formally acknowledges and accepts the obligations and responsibilities outlined in the original Franchise Agreement.
This document, referred to as a joinder agreement or assumption of the Franchise Agreement, effectively makes the business entity a co-obligor under the existing agreement. This protects Stretch Zone's interests by ensuring that the terms of the franchise agreement continue to be upheld even after the transfer to a new business entity. The franchisee remains personally liable for all monetary and non-monetary obligations under the agreement arising before or after the transfer through the end of the initial term and any renewal term.
Prospective Stretch Zone franchisees should carefully review the specific terms of the joinder agreement or assumption document with their legal counsel to fully understand the obligations they are undertaking when transferring the franchise agreement to a business entity. This includes understanding the scope of liability and the implications for the operation of the Stretch Zone business.