Under what circumstances does the Stretch Zone Security Agreement automatically terminate?

According to Stretch Zone's 2025 Franchise Disclosure Document, the Security Agreement automatically terminates upon full performance under the Franchise Agreement without renewal. Following this termination, Stretch Zone will provide the franchisee with a UCC-3 Statement of Termination, which serves as official confirmation that the security interest has been released. This indicates that once the franchisee has fulfilled all obligations outlined in the Franchise Agreement and is not renewing the agreement, the Security Agreement, which likely covers collateral securing the franchisee's obligations, is no longer in effect.

For a prospective Stretch Zone franchisee, this means that upon completing the full term of their franchise agreement and choosing not to renew, the Security Agreement they signed will automatically end. This is a standard practice in franchising, as the security interest is typically tied to the duration and performance of the franchise agreement. The UCC-3 Statement of Termination is an important document for the franchisee to retain, as it provides legal proof that Stretch Zone no longer has a claim on any assets that were previously secured under the agreement.

It is important for franchisees to understand what constitutes "full performance" under the Franchise Agreement. This likely includes meeting all financial obligations, adhering to operational standards, and fulfilling any other requirements outlined in the agreement. Franchisees should also be aware of the implications of renewing the Franchise Agreement, as renewal would likely mean the Security Agreement remains in effect. This clause provides a clear endpoint for the Security Agreement, offering franchisees certainty about the duration of their obligations and the release of any secured assets upon completion of the franchise term.