factual

What specific sections of the Stretch Zone Franchise Agreement relate to confidentiality and non-competition covenants that, if breached, can lead to termination?

Stretch_Zone Franchise · 2025 FDD

Answer from 2025 FDD Document

he Franchise Business inures directly and exclusively to our benefit and is our sole and exclusive property except through any profit you receive from the permitted sale of your Franchise Business during the Initial Term or any Renewal Term. You will not in any manner prohibit, or do anything that would restrict, us or any Franchisee from using the Intellectual Property or filing any trade name, assumed name or fictitious name registration of the Principal Trademark with respect to any Franchise Business to be conducted outside the Limited Protected Territory or any business within the Limited Protected Territory that is permitted by this Agreement. If you secure in any jurisdiction any rights to any of the Intellectual Property (or any other Intellectual Property) not expressly granted under this Agreement, you will immediately notify us and immediately assign to us all of your right, title and interest to the Intellectual Property (or any other Intellectual Property).

ARTICLE 6 - THE OPERATIONS MANUAL

Section 6.1 IN GENERAL

To protect our reputation and goodwill and to maintain uniform standards of operation under the Intellectual Property, you will conduct your Franchise Business in accordance with the Operations Manual. The Operations Manual is an integral part of this Agreement with the same effect as if fully stated in this Agreement.

Section 6.2 CONFIDENTIAL USE

  • (a) Trade Secret. You will treat and maintain the Confidential Information as our confidential trade secrets except for information previously known or obtained through independent sources and found within the public domain. You must keep the Operations Manual in a secure area within the Premises. You will strictly limit access to the Confidential Information to your employees that have signed a Confidentiality and Non-Competition Agreement in the form included in the Operations Manual and to the extent they have a "need to know" in order to perform their duties. You will report the theft, loss or destruction of the Operations Manual immediately to us.
  • (b) Unauthorized Use. You agree that, during and after the Initial Term, you, your Franchise Owners, Designated Representative, Regional Managers and employees will:
    • (i) Not use the Confidential Information in any other business or capacity, including any derivative or spin-off of the Stretch Zone concept;

  • (ii) Maintain the absolute secrecy and confidentiality of the Confidential Information during and after the Initial Term;
  • (iii) Not make unauthorized copies of any portion of the Confidential Information disclosed or recorded in written or other tangible form; and
  • (iv) Adopt and implement all procedures that we require to prevent unauthorized use or disclosure of, or access to, the Confidential Information.
  • (v) Not modify, reverse engineer, decompile, create other works from or disassemble any of our or any of our Affiliates' Confidential Information, except as we permit in writing.

Section 6.3 PERIODIC REVISIONS

  • (a) Changes to Manual. We will revise the Operation Manual and these standards, procedures, techniques and management systems periodically to meet changing conditions. You will comply with each new or changed provision beginning on the 30th day (or any longer time as we specify) after our written notice. We will base revisions to the Operations Manual on what we determine to be in the best interests of the Business System, our interest and the interest of our Franchisees, including promoting quality, enhancing goodwill, increasing efficiency, decreasing administrative burdens, or improving profitability.
  • (b) Variances. Because complete and detailed uniformity under many varying conditions may not be possible or practical, we reserve the right, in our sole discretion and as we may deem to be in the best interests of all concerned in any specific instance, to vary standards for any Franchisee based on the circumstances then existing. You are not entitled to require us to grant to you a similar variation under this Agreement.

SECTION 6.4 PRIOR INFORMATION

You agree that all Confidential Information received before the Agreement Date was unknown to you except through our disclosure and that the marketing practices and operating procedures we develop and franchise to you for the operation of the Franchise Business are important for the success of the Business System.

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, Section 6.2 outlines the franchisee's obligations regarding confidential information, specifying that franchisees must maintain the secrecy of this information both during and after the initial term. This includes not using the confidential information in any other business, preventing unauthorized copies, and implementing procedures to protect the information. Failing to comply with these confidentiality requirements could lead to termination of the agreement.

Additionally, Section 12.5 addresses non-competitive business activities post-termination. If Stretch Zone does not exercise its option to renew the agreement and the franchisee wishes to continue operating at the same premises, they can only do so with a business that does not violate the non-compete covenant. The franchisee must also modify the premises to clearly differentiate it from a Stretch Zone franchise, including removing Stretch Zone signage and informing customers that the business is no longer associated with Stretch Zone.

Section 12.6 further emphasizes unfair competition, prohibiting franchisees from engaging in activities that could harm Stretch Zone's business or relationships. This includes interfering with Stretch Zone's relationships with customers, suppliers, or other franchisees. These sections collectively highlight the importance Stretch Zone places on protecting its confidential information and preventing unfair competition, with breaches potentially resulting in termination of the franchise agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.