What is the significance of Stretch Zone's member's deficit of ($54,245,123) in relation to the estimated initial investment in Virginia?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
ted its pre-opening obligations under the Franchise Agreement.
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- ITEM 17(h) is amended to read as follows:
Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for us to cancel a Franchise without reasonable cause. If any groun
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, a Virginia addendum addresses the franchisor's member's deficit. It highlights that the estimated initial investment for a Stretch Zone franchise in Virginia, ranging from $138,745 to $320,099, is less than Stretch Zone's member's deficit of ($54,245,123) as of December 31, 2024. This disclosure serves as a risk factor for potential franchisees in Virginia.
This risk disclosure indicates that Stretch Zone's financial liabilities significantly exceed its assets. For a prospective franchisee, this suggests that Stretch Zone may be facing financial challenges at the corporate level. While the initial investment for a single franchise unit may seem manageable, the larger financial picture of the franchisor could impact the support and resources available to franchisees.
Potential franchisees should carefully consider this information and conduct thorough due diligence. This includes reviewing Stretch Zone's audited financial statements, available within the FDD, and seeking professional financial advice. Understanding the franchisor's financial stability is crucial in assessing the overall risk and potential success of investing in a Stretch Zone franchise. It would be prudent to inquire with Stretch Zone about their plans to address the member's deficit and ensure long-term financial health.