What obligations does the transferee have regarding the lease of the premises for a Stretch Zone franchise?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Right to Cure and Take Occupancy.
- (a) If the Tenant/Franchisee defaults under the Lease, the Franchisor may (but is under no obligation to), within 30 days after receipt of written notice from the Landlord, cure the default (or a longer period of time if the default is not capable of being cured within 30 days and the Franchisor is diligently proceeding to cure the default).
If the Franchisor cures the Tenant/Franchisee's default, the Franchisor has the right to occupy the Premises and operate the Franchise Business.
The Tenant/Franchisee is deemed to have assigned the Lease to the Franchisor, but the Tenant/Franchisee and any guarantors are not released from their obligations under the Lease.
From and after the deemed assignment, the Franchisor will assume and perform all of the obligations of the Tenant/Franchisee under the Lease until the Franchisor is released in accordance with Subsection 4(b).
- (b) The Franchisor may assign the Lease to another Stretch Zone Franchisee with the Landlord's written approval of the new tenant/franchisee.
The Landlord will not unreasonably withhold, delay or condition its approval of the new tenant/franchisee.
Upon the permitted assignment by the Franchisor to the new tenant/franchisee, the Franchisor is released from all further obligations under the Lease.
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- Modification of Lease. The Landlord and the Tenant/Franchisee will not make any material modifications to the Lease without the Franchisor's written consent, which consent the Franchisor will not unreasonably withhold, delay or condition.
If the Franchisor does not take occupancy of the Premises and does not assume the Lease, the Landlord agrees to the Franchisor's rights under the Franchise Agreement, upon reasonable notice to the Landlord, to enter the Premises solely for the purposes of taking all steps necessary to protect its interest under the Franchise Agreement including the removal of all signs and other items bearing the Proprietary Marks of the Franchisor (without damage to 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 the 2025 Stretch Zone FDD, in the event that a Stretch Zone franchisee defaults on their lease, Stretch Zone has the option to cure the default within 30 days of receiving written notice from the landlord. If Stretch Zone cures the default, it has the right to occupy the premises and operate the franchise. The original franchisee is then deemed to have assigned the lease to Stretch Zone, but remains responsible for their obligations under the lease unless officially released.
Stretch Zone has the option to assign the lease to another Stretch Zone franchisee, but this requires written approval from the landlord. The landlord is expected to provide this approval without unreasonable delay or conditions. Once Stretch Zone assigns the lease to a new franchisee and the landlord approves, Stretch Zone is then released from any further obligations under the lease.
Furthermore, the FDD states that the landlord and the franchisee cannot make any significant changes to the lease without Stretch Zone's written consent, which Stretch Zone will not unreasonably withhold, delay, or place conditions upon. This protects Stretch Zone's interests by ensuring the lease terms remain favorable to the franchise operation. If Stretch Zone does not take over the lease upon termination or expiration of the Franchise Agreement, the landlord agrees to allow Stretch Zone to enter the premises to protect its interests, including removing signs and items bearing Stretch Zone's trademarks.