What pre-opening obligations must Stretch Zone fulfill before the Initial Franchise Fee becomes payable?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| (a) and you are open for business. Franchisees currently purchasing a Franchise. | Initial Franchise Fee. You must pay to us an Initial Franchise Fee of $59,500. The Initial Franchise Fee will be deferred and is not payable to us until we have complied with all of our pre-opening obligations to you under this Agreement The Initial Franchise Fee is uniform as to all Each of the undersigned acknowledges having read this Addendum, understands and | | consents to be bound all of its terms. | FRANCHISEE |
ITEM 5 is amended by adding the following applicable language to the end of the applicable section of Item 5:
INITIAL FRANCHISE FEE
The Initial Franchise Fee will be deferred and is not payable to us until we have complied with all of our pre-opening obligations to you under the Franchise Agreement and you have begun doing business.
INITIAL CONTRIBUTION TO MEDIA FUND
The initial Advertising Contribution will be deferred and is not payable to us until we have complied with all of our pre-opening obligations to you under the Franchise Agreement and you are open for business.
DEVELOPMENT FEE
Because Franchisor has material pre-opening obligations with respect to each Franchise Business the Franchisee opens under the Area Development Agreement, payment of the Development Fee will be released proportionately with respect to each Franchise Business opened and is deferred until the Franchisor is met all its pre-opening obligations under the Franchise Agreement and Franchisee is open for business with respect to each such location.
We will give our written consent when: (a) all your obligations under Sections 4.1 through 4.9 have been fulfilled; (b) we determine that your Franchise Business has been constructed, furnished, equipped, and decorated in accordance with approved plans and specifications; (c) those individuals that we designate (whether in this Agreement or the Manual) have attended and completed, to our reasonable satisfaction, Pre-Opening Training, any other pre-opening training that we require, and you have at least 1 Certified Stretch Zone Practitioner; (d) the Initial Franchise Fee and all amounts due to us and our Affiliates under this Agreement have been paid in full; (e) we have been furnished with certificates of insurance and copies of all insurance policies or all other evidence of insurance coverage as we reasonably request; (f) you have obtained a certificate of occupancy for your Premises; and (g) you have obtained all necessary licenses and permits to operate your Franchise Business.
After we have performed all of our pre-opening obligations and you are open for business, we may request you to sign a certification in the form included in the Operations Manual ("Certificate of Performance") confirming our performance.
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, the initial franchise fee of $59,500 is deferred and not payable until Stretch Zone has complied with all of its pre-opening obligations to the franchisee under the Franchise Agreement and the franchisee is open for business. This amendment ensures that the franchisee does not have to pay the initial fee until Stretch Zone has fulfilled its responsibilities in helping the franchisee get their business up and running. This also applies to the initial advertising contribution and the development fee for area developers.
Stretch Zone's pre-opening obligations include providing written consent to open when the franchisee has fulfilled obligations under Sections 4.1 through 4.9 of the agreement. This consent is also contingent on Stretch Zone determining that the franchise business has been constructed, furnished, equipped, and decorated according to approved plans and specifications. Additionally, designated individuals must have attended and completed pre-opening training to Stretch Zone's satisfaction, and the franchisee must have at least one Certified Stretch Zone Practitioner.
Furthermore, Stretch Zone must perform all of its pre-opening obligations before requesting the franchisee to sign a certification confirming their performance. This indicates that Stretch Zone takes responsibility for meeting certain milestones and providing necessary support before the franchisee is fully operational and before the initial fees become due. This arrangement protects the franchisee by aligning the payment of fees with the franchisor's delivery of essential pre-opening services and support.