Does Stretch Zone have the right to assign its option to purchase the assets of a Stretch Zone franchise?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Right to Cure and Take Occupancy.
- (a) If the Tenant/Franchisee defaults under the Lease, the Franchisor may (but is under no obligation to), within 30 days after receipt of written notice from the Landlord, cure the default (or a longer period of time if the default is not capable of being cured within 30 days and the Franchisor is diligently proceeding to cure the default).
If the Franchisor cures the Tenant/Franchisee's default, the Franchisor has the right to occupy the Premises and operate the Franchise Business.
The Tenant/Franchisee is deemed to have assigned the Lease to the Franchisor, but the Tenant/Franchisee and any guarantors are not released from their obligations under the Lease.
From and after the deemed assignment, the Franchisor will assume and perform all of the obligations of the Tenant/Franchisee under the Lease until the Franchisor is released in accordance with Subsection 4(b).
- (b) The Franchisor may assign the Lease to another Stretch Zone Franchisee with the Landlord's written approval of the new tenant/franchisee.
The Landlord will not unreasonably withhold, delay or condition its approval of the new tenant/franchisee.
Upon the permitted assignment by the Franchisor to the new tenant/franchisee, the Franchisor is released from all further obligations under the Lease.
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 Franchise Disclosure Document, Stretch Zone has the right to assign the lease to another Stretch Zone franchisee under certain conditions. Specifically, if a Tenant/Franchisee defaults under their lease agreement, Stretch Zone has the option to cure the default within 30 days of receiving written notice from the landlord. If Stretch Zone cures the default, it has the right to occupy the premises and operate the franchise business.
In this scenario, the Tenant/Franchisee is considered to have assigned the lease to Stretch Zone, although the original Tenant/Franchisee remains obligated under the lease unless explicitly released. However, Stretch Zone's rights are not unlimited. Stretch Zone may assign the lease to another Stretch Zone franchisee, but this assignment requires the landlord's written approval of the new tenant/franchisee. The landlord's approval cannot be unreasonably withheld, delayed, or conditioned.
Upon Stretch Zone's permitted assignment of the lease to a new franchisee, Stretch Zone is released from any further obligations under the lease. This process ensures the continued operation of the Stretch Zone franchise at the location while providing a mechanism for Stretch Zone to transfer its operational rights and responsibilities to another franchisee, subject to the landlord's approval.