What representation does the Guarantor make regarding previously delivered financial statements to Stretch Zone?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Representations and Warranties. The Guarantor represents as follows:
(a) The Guarantor has the capacity to enter into, perform and deliver this Guaranty.
(b) This Guaranty is the legal, valid, binding and enforceable obligations of the Guarantor.
(c) There is no litigation or governmental proceeding pending or threatened against the Guarantor, nor has there occurred any event, nor does there exist any condition, on the basis of which any litigation or proceeding might be begun, which litigation or proceeding, if adversely determined, could have a material adverse effect on the respective properties, operations, assets, condition (financial, business, labor or otherwise) or prospects of the Guarantor.
(d) The Guarantor has independent means of obtaining reports and financial information about the Developer and the Franchisor has no obligation, either before the signing of this Guaranty or any time thereafter, to notify the Guarantor concerning the Developer's financial condition or of any event or occurrence affecting the Developer's financial condition or business operation.
(e) Any financial statements previously delivered by the Guarantor to the Franchisor were true and correct in all respects as of the date delivered.
At any time this Guaranty is in effect, Guarantor will, upon 7-days prior written notice from the Franchisor, provide the Franchisor with a current financial statement and such other financial information as the Franchisor may reasonably request (including copies of Guarantor's filed federal and state income tax returns for the most recent taxable year).
The Franchisor agrees to keep confidential and not use such financial statements and information, except in connection with the administration or enforcement of the Franchise Agreement or this Guaranty.
The financial statements must be prepared in accordance with generally accepted accounting principles.
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 guarantor has previously provided financial statements to Stretch Zone, the guarantor represents that those financial statements were accurate and correct in all aspects as of the date they were delivered. This representation is part of the broader set of representations and warranties the guarantor makes when entering into the guaranty agreement.
This means that Stretch Zone relies on the accuracy of the financial information provided by the guarantor when assessing their ability to fulfill their obligations under the guaranty. If the financial statements were not accurate, it could potentially impact the enforceability of the guaranty or expose the guarantor to liability.
Furthermore, Stretch Zone has the right to request updated financial statements from the guarantor during the term of the guaranty. The guarantor is obligated to provide these statements within seven days of receiving written notice from Stretch Zone. These financial statements must adhere to generally accepted accounting principles. Stretch Zone agrees to keep these financial statements confidential, using them only for the administration or enforcement of the Franchise Agreement or the Guaranty.