Under the Stretch Zone Area Development Agreement, what agreement will the parties negotiate?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Area Development Rights. In addition to the single-Unit Stretch Zone Franchise, we offer to certain qualified persons rights to develop at least 2 Stretch Zone Franchises within a specified Development Area as required by a Development Schedule to be negotiated by the parties under a Stretch Zone Area Development Agreement, a copy of which is included as Exhibit E. For the perimeter of the Development Area, you agree that you will not select a site that is within the limited protected territory of a Company-Owned Unit or Franchised Unit that is operating or under construction. We agree not to open a Company-Owned Unit or a Franchised Unit within the Limited Protected Territory of any of your Franchised Units even if the Limited Protected Territory extends outside the Development Area. Non-Traditional Franchised Units and locations are excluded from your Area Development Agreement and the Development Area. For each Stretch Zone Franchise you develop, you must sign our then-current form of Stretch Zone Franchise Agreement, which may differ from the Franchise Agreement included as Exhibit C, and pay the balance of the Initial Franchise Fee (if applicable). If you fail to timely achieve the Development Schedule, we may elect to terminate the Area Development Agreement. If we terminate the Area Development Agreement, you will have no right to develop and open additional Franchise Businesses under the Area Development Agreement. You may, however, keep your Franchised Units then developed or under construction, provided you are not in default under the applicable Franchise Agreements. The material terms of the then-current form of Stretch Zone Franchise Agreement may vary substantially from the Stretch Zone Franchise Agreement contained in Exhibit C. When you sign the Area Development Agreement, you also will sign the Franchise Agreement for your first Franchise Business to be developed under the Area Development Agreement. If you are not purchasing Area
Source: Item 1 — ITEM -1 THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 10–15)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, the parties will negotiate a Development Schedule under the Stretch Zone Area Development Agreement. This schedule will specify the timeline for developing at least two Stretch Zone franchises within a defined Development Area.
This agreement is significant for potential franchisees interested in expanding their presence by opening multiple Stretch Zone locations. The Development Schedule outlines the specific milestones and deadlines that the franchisee must meet to maintain their rights to develop additional units within the agreed-upon area. Failure to adhere to this schedule could result in the termination of the Area Development Agreement, potentially limiting the franchisee's expansion opportunities.
It is important to note that when signing the Area Development Agreement, the franchisee will also sign the Franchise Agreement for the first Stretch Zone business to be developed under the Area Development Agreement. The FDD also states that the then-current form of Stretch Zone Franchise Agreement may vary substantially from the Franchise Agreement contained in Exhibit C. This highlights the importance of carefully reviewing all terms and conditions before committing to the Area Development Agreement, as the terms of the franchise agreement for subsequent locations may differ.
Prospective franchisees should carefully consider the Development Schedule and their ability to meet the specified milestones before entering into an Area Development Agreement with Stretch Zone. Understanding the obligations and potential consequences of failing to meet the development schedule is crucial for making an informed investment decision.