Does Stretch Zone reserve the right to establish alternative channels of distribution within a developer's Development Area?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
(g) Alternate Channels of Distribution
We reserve the right to establish alternatives channels of distribution within your Development Area without compensation.
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, Stretch Zone retains the right to establish alternative channels of distribution within a developer's assigned area. Specifically, Stretch Zone can pursue these alternative channels without providing any compensation to the developer. This policy is outlined in the California Addendum to the Area Development Agreement.
For a prospective Stretch Zone area developer, this means that while they are granted rights to develop franchises within a specific geographic area, Stretch Zone is not restricted from also pursuing other methods of distribution within that same area. These alternative channels could potentially compete with the developer's franchise locations, impacting their market share and revenue.
This lack of exclusivity could pose a significant risk to the developer's investment. It is important for potential developers to fully understand the implications of this clause and to assess the potential impact of alternative distribution channels on their business. It would be prudent to discuss with Stretch Zone what specific alternative channels they might consider and how those channels would be managed to avoid direct competition with existing franchises.