Who is subject to the post-term non-compete restrictions besides the Stretch Zone franchisee?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Affiliate" means any Business Entity controlled by, controlling, or under common control with, us regardless of whether an Affiliate sells products or services to you or sells franchises in any line of business.
The term "Affiliate" also means any Affiliate of the Franchisee.
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)
Based on the 2025 Stretch Zone Franchise Disclosure Document, the term "Affiliate" is defined to include any Business Entity controlled by, controlling, or under common control with the franchisor, regardless of whether that entity sells products or services to the franchisee or sells franchises in any line of business. The term "Affiliate" also means any Affiliate of the Franchisee. This definition is relevant because the non-compete obligations extend not only to the franchisee but also to their Affiliates.
This means that after the termination or expiration of the franchise agreement, both the franchisee and any entities affiliated with them are restricted from engaging in businesses that compete with Stretch Zone. This restriction aims to protect Stretch Zone's market position and proprietary information.
The broad definition of "Affiliate" has significant implications for a prospective franchisee. It means that the franchisee cannot circumvent the non-compete obligations by operating a competing business through a related entity. This restriction applies to any business entity over which the franchisee has control, or that is under common control with the franchisee, thereby preventing any indirect competitive activities.