What post-termination obligations must a Stretch Zone area developer comply with after the Area Development Agreement terminates or expires?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Area Development Agreement | Summary |
|---|---|---|
| termination or expiration of the Area Development Agreement, all your Area Development Rights cease rights cease. We are then free to open Company Owned Businesses or franchise Stretch Zone Franchises to others within your former Development Area but outside any Limited Protected Territories granted to you under Franchise Agreements for Franchise Businesses you are currently operating or are under construction, provided you are not in otherwise in default under any Franchise Agreement. | ||
| i. Your obligations on termination/ nonrenewal | Sections 4.1 and 7.4 | Upon termination or expiration of the Area Development Agreement, all your Area Development Rights cease rights cease. If we terminate the Area Development Agreement for your failure to meet the Development Schedule, you will retain all rights under the Franchise Agreements for the Franchise Businesses you have under lease, construction or in operation at that time, as long as you are not otherwise in default under those Franchise Agreements. You must comply with your post-termination and post-expiration obligations under the Franchise Agreements and those obligations that survive the termination or expiration of the Franchise Agreements including the obligations of indemnification, confidentiality and non-competition. |
Source: Item 17 — ITEM -17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 65–73)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, upon termination or expiration of the Area Development Agreement, the area developer's Area Development Rights cease. Stretch Zone is then free to open company-owned businesses or franchise Stretch Zone franchises to others within the former Development Area, except for any Limited Protected Territories granted under Franchise Agreements for Franchise Businesses the developer is currently operating or has under construction, provided the developer is not in default under any Franchise Agreement.
Additionally, the area developer must comply with post-termination and post-expiration obligations under the Franchise Agreements. These obligations survive the termination or expiration of the Franchise Agreements and include obligations of indemnification, confidentiality, and non-competition.
It is important for prospective Stretch Zone area developers to understand these post-termination obligations, as they can significantly impact their ability to operate similar businesses or associate with competitors after the Area Development Agreement ends. The obligations related to indemnification, confidentiality, and non-competition are standard in franchising to protect the brand and trade secrets of Stretch Zone.