Under the Stretch Zone agreement, are the franchisee's payment obligations subject to any withholding, abatement, or setoff?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
nsfer pursuant to Sections 10.2, 10.3, and 10.4, except for a transfer in accordance with Section 10.2(b), you will pay us a fee in the amount of $10,000 (the "Transfer Fee").
- (h) Renewal Fee. Shortly before the expiration of the Initial Term, if you decide to obtain a Renewal Franchise Agreement in accordance with Subsection 16.2(a), you must pay us a Renewal Fee equal to 50% of the then-current Initial Franchise Fee.
- (i) Our Attorneys' Fees. If after the Franchise Agreement is signed by the parties: (i) you request our written consent to any action of yours and we consult our attorney; or (ii) we have our attorney prepare a letter, a Notice of Default or a Notice of Termination to you, then you agree to reimburse us for our attorneys' fees and costs under these circumstances.
- (j) Fines for Non-Compliance. If we find you to be in violation of certain terms of this Agreement constituting a material default by you that would entitle us to terminate the Franchise Agreement, we will send you a letter setting forth the nature of the non-complying act and what steps you must take to cure the violation. We will also impose a fine of $250, provided that, if the default involves the offer or sale of unauthorized or prohibited products, the fine is $500 per day until you
cease such offer or sale. You must immediately cure the violation and pay the fine within 10 days of receipt of our notice of non-compliance. If you fail to cure and pay the fine in a timely manner, we reserve the right to exercise our rights under ARTICLE 11. These acts of non-compliance include the following:
- (i) If we see an unauthorized product for sale at your Premises;
- (ii) If you use the Stretch Zone name and logo in an inappropriate way;
- (iii) If a person providing stretching service is not certified by us, a $250 fine will be issued for every day the person continues to provide stretching services;
- (iv) If we find that your employees are not in uniform or otherwise complying with our dress code - $200 fine; or
- (v) If you receive an inspection report from us that reveals material violation or our operating standards.
The Manuals contains further information on other types of violations that are subject to fines.
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 agreement does not explicitly state whether the franchisee's payment obligations are subject to any withholding, abatement, or setoff. However, the document does outline the payment schedule for various fees, including Royalty Fees, Technology Fees, training fees, Advertising Contributions, and Fines, which are automatically billed and processed through the POS system. Payments are due upon receipt of the invoice if no specific due date is provided, and any payment not received by the due date is considered overdue.
Additionally, the FDD mentions fines for non-compliance with the franchise agreement, such as selling unauthorized products (a $500 fine per day), misusing the Stretch Zone name and logo, employing uncertified personnel (a $250 fine per day per person), employees not adhering to the dress code ($200 fine), or material violations of operating standards. These fines, along with other fees and obligations detailed in Item 6 of the FDD, are also subject to the payment terms outlined in Section 3.2.
While the document specifies how and when payments are due, it does not address the possibility of withholding, abatement, or setoff. A prospective franchisee should seek clarification from Stretch Zone regarding whether there are any circumstances under which they might be entitled to reduce or delay their payments. This information is crucial for understanding the full scope of the franchisee's financial obligations and rights under the agreement.