Under what condition can the Stretch Zone Franchisor assign the lease to another Stretch Zone Franchisee?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) The Franchisor may assign the Lease to another Stretch Zone Franchisee with the Landlord's written approval of the new tenant/franchisee.
The Landlord will not unreasonably withhold, delay or condition its approval of the new tenant/franchisee.
Upon the permitted assignment by the Franchisor to the new tenant/franchisee, the Franchisor is released from all further obligations under the Lease.
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 Stretch Zone's 2025 Franchise Disclosure Document, Stretch Zone Franchising, LLC can assign the lease to another Stretch Zone franchisee if the landlord provides written approval of the new tenant/franchisee. The document specifies that the landlord will not unreasonably withhold, delay, or condition its approval. Upon this permitted assignment, Stretch Zone is released from all further obligations under the lease.
This clause protects Stretch Zone by allowing them to transfer the lease to a new franchisee, ensuring continued operation of the business at that location. For a prospective franchisee, this means that if they were to default on their lease, Stretch Zone has the option to step in, cure the default, and then assign the lease to another franchisee, mitigating potential losses for both Stretch Zone and the landlord. This transfer is contingent on the landlord's approval, which provides a safeguard for the landlord as they have the right to assess the suitability of the new tenant.
It is important to note that the original franchisee remains obligated under the lease unless Stretch Zone assigns the lease to a new franchisee with the landlord's approval. This condition ensures that the landlord's interests are protected, as they have recourse to the original franchisee even after the assignment to Stretch Zone. The landlord's agreement not to unreasonably withhold approval is a standard clause that aims to balance the interests of all parties involved, preventing arbitrary denial of a suitable replacement tenant.