When transferring a Stretch Zone franchise, is it required to sign and deliver a Franchise Termination and Release Agreement?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ix) You and your shareholders (members), and your directors and officers (managers) must sign a Franchise Termination and Release Agreement, in the form attached as Exhibit N to the FDD, of any claims against us and our subsidiaries and Affiliates, and their respective officers, directors, agents and employees.
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 FDD, if you are transferring your franchise, you, your shareholders (members), and your directors and officers (managers) must sign a Franchise Termination and Release Agreement. This agreement, in the form attached as Exhibit N to the FDD, releases Stretch Zone and its subsidiaries and affiliates, along with their respective officers, directors, agents, and employees, from any claims.
This requirement is one of several conditions that must be met to complete the transfer of a Stretch Zone franchise. Other conditions include Stretch Zone not exercising its right of first refusal, the franchisee not being in default of any agreements, the transferee completing the application procedures, and the transferee demonstrating the necessary skills and financial capacity. The transferee must also sign the then-current form of the Franchise Agreement and assume the obligations under the lease or sign a new lease.
Additionally, the transferee's personnel must complete the required training programs, and the franchisee must pay a transfer fee to reimburse Stretch Zone for costs associated with approving the transfer and training the transferee. Finally, both parties must sign Stretch Zone's form of Franchisor's Consent to Transfer or Sale.
This ensures that Stretch Zone maintains control over who operates its franchises and that all parties are clear on their obligations and liabilities before, during, and after the transfer. The new Franchise Agreement signed by the transferee may have different terms than the original agreement, including potentially higher Royalty Fees and Advertising Fees and a smaller Limited Protected Territory.