Does Stretch Zone have the right to approve or disapprove of any transfers?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Development Agreement expires, unless earlier terminated, on the earlier of: (i) the date that the last Franchise Business required to be opened under the Development Schedule actually opens; or (ii) the date that such Franchise Business is required to be opened under the Development Schedule. | | b. Renewal or | Not Applicable | Not Applicable | | extension of the term1 | | | | c. Requirements for | Not Applicable | Not Applicable | | you to renew or | | | | extend | | | | d. Termination by | Not Applicable | You may terminate under any grounds permitted by law. | | you1 | | | | e. Termination by us | Not Applicable | Not Applicable | | without cause | | | | f. Termination by us | Section 7.2 | We may only terminate your Area Development | | with cause | | Agreement with cause. | | g. “Cause” defined – curable defaults | Section 7.3 | You have 30 days or any longer period as applicable law may require, after written notice of default to cure any default and provide evidence of cure satisfactory to us. If you fail to cure timely any curable default, we have the right to terminate the Area Development Agreement effective upon your receipt of our written notice of termination. You have the burden of proving you have timely cured any default, to the extent it is a curable default under the Area Development Agreement. Upon |
| Provision | Section in Area Development Agreement | Summary | |---|---|---| | v. Choice of forum1 | Section 9.1 | Subject to state law, any informal dispute resolution, | | | | mediation or arbitration proceeding must be conducted | | | | where our principal office is located when the demand is | | | | requested. Any litigation to enforce the Area | | | | Development Agreement must be filed in the courts | | | | where our principal office is located when litigation is | | | | filed (currently Broward County, Florida). | | w. Choice of law1 | Section 9.1 | Except to the extent governed by the United States | | | | Trademark Act of 1946, the United States Copyright Act | | | | or the United States Arbitration Act, , and subject to | | | | applicable state law, the Development Agreement is | | | | interpreted under the laws of Florida. |
| Provision | Section in Franchise Agreement | Summary |
|---|
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, Stretch Zone retains the right to either approve or disapprove any proposed franchise transfers. This provision is detailed within the Franchise Agreement, specifically in Sections 10.2 and 10.3. This means that if a franchisee wishes to sell their Stretch Zone franchise to a third party, they must first obtain approval from Stretch Zone.
Several conditions must be met to gain Stretch Zone's approval for a transfer. The franchisee must provide written notice to Stretch Zone, and Stretch Zone must not exercise its right of first refusal to purchase the franchise. Additionally, the franchisee must not be in default of any agreements with Stretch Zone or its affiliates. The proposed transferee must also complete Stretch Zone's application procedures to their satisfaction, including an interview.
Furthermore, the transferee is required to sign a new franchise agreement, which may contain terms and conditions that differ from the original agreement. However, the transferee will not be required to pay a new initial franchise fee. A transfer fee of $10,000 must be paid by either the franchisee or the transferee. The transferee must also assume all of the franchisee's obligations, including the lease, and the franchisee must sign a Franchise Termination and Release Agreement. Finally, the transferee must successfully complete Stretch Zone's Franchisee Training Program and any other current training requirements.
This level of control over transfers is common in franchising, as it allows Stretch Zone to maintain brand standards and ensure that new franchisees are well-qualified. However, the conditions for transfer, including the $10,000 transfer fee and the requirement for the transferee to sign a new agreement with potentially different terms, are important considerations for any prospective Stretch Zone franchisee.