Under what conditions are all initial fees deferred for a Stretch Zone franchise in Illinois?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
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- All initial fees are deferred until we have performed all of pre-opening obligations and you are open for business. The Illinois Attorney General's Office imposed this deferral requirement due to our financial condition.
Section 3.1 of the Area Development Agreement is amended as follows:
SECTION 3.1 DEVELOPMENT FEE
In consideration of the rights granted to you, you will pay to us a Development Fee when we have complied with all of our pre-opening obligations to you under the Development Agreement and the Franchise Agreement for the 1st Franchise Business, and you are open for business. This is in addition to the deferral of the Initial Franchise Fee for the 1st Franchise Business.
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- All initial fees are deferred until we have performed all of pre-opening obligations and you are open for business. The Illinois Attorney General's Office imposed this deferral requirement due to our financial condition.
Section 3.1(a) of the Franchise Agreement is amended as follows:
- (a) Initial Franchise Fee. You must pay to us an Initial Franchise Fee of $59,500. The Initial Franchise Fee will be deferred and is not payable to us until we have complied with all of our pre-opening obligations to you under the Franchise Agreement and you are open for business. The Initial Franchise Fee is uniform as to all Franchisees currently purchasing a Franchise.
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 Franchise Disclosure Document, for franchisees in Illinois, all initial fees are deferred under specific conditions. The Illinois Attorney General's Office imposed this requirement due to Stretch Zone's financial condition. This deferral means that franchisees do not have to pay any initial fees until Stretch Zone has fulfilled all of its pre-opening obligations to the franchisee.
Specifically, the initial fees are deferred until Stretch Zone has complied with all pre-opening obligations outlined in both the Area Development Agreement and the Franchise Agreement for the first franchise business. Furthermore, the deferral is contingent upon the franchisee being open for business. This condition applies to both the Development Fee and the Initial Franchise Fee, which is typically $59,500.
This deferral provides a significant benefit to prospective Stretch Zone franchisees in Illinois, as it reduces the upfront financial burden. It also aligns the interests of the franchisor and franchisee, as Stretch Zone is incentivized to provide the necessary support and fulfill its obligations promptly to enable the franchisee to open for business and trigger the payment of fees. However, it's important to note that this deferral is specific to Illinois and is a result of regulatory intervention due to Stretch Zone's financial situation, which may indicate a higher level of risk compared to other franchise opportunities.