Under what conditions can Stretch Zone modify a franchisee's Limited Protected Territory?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
d in the first paragraph of this Section), products and services to customers and other third parties that are similar or dissimilar to, or competitive with, any products and services provided at Units, whether identified by the Trademarks or other trademarks or service marks, regardless of the method of distribution (including through our Website, other retail outlets, shipping and delivery), including temporary locations, such as events occurring for a limited duration; and
- (d) acquiring the assets or ownership interests of, or being acquired (regardless of the form of transaction) by, one or more businesses providing products and services similar or dissimilar to those provided at Units, and franchising, licensing or creating other arrangements with respect to these businesses once acquired, wherever these businesses (or the franchisees or licensees of these businesses) are located or operating, whether within or outside the Limited Protected Territory.
CONDITIONS TO CONTINUED LIMITED PROTECTED TERRITORY.
Minimum Performance Standard. We expressly condition the grant of your Limited Protected Territory upon your successful penetration of the market in your Limited Protected Territory. You agree to promote actively and aggressively the services offered at your Franchise Business within your Limited Protected Territory. Beginning in your 2nd full business year of operation and each full business year thereafter, the Franchise Business must generate at least $240,000 in annual Gross Revenues. To cure this default you must pay us an "Underperformance Fee" equal to 6% of the difference between your actual Gross Revenues and $240,000.
Source: Item 12 — ITEM -12 TERRITORY (FDD pages 54–58)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, the franchisor can modify a franchisee's Limited Protected Territory under specific conditions. Stretch Zone cannot unilaterally alter the territory. Any modification requires a written amendment to the Franchise Agreement, signed by both Stretch Zone and the franchisee.
However, Stretch Zone has the right to reduce the size of the Limited Protected Territory or terminate the Franchise Agreement if the franchisee breaches the agreement and fails to cure the breach in a timely manner.
Additionally, the grant of the Limited Protected Territory is conditional upon the franchisee's successful market penetration. Starting from the second full business year, the Franchise Business must generate at least $240,000 in annual Gross Revenues. Failure to meet this minimum performance standard requires the franchisee to pay an "Underperformance Fee" equal to 6% of the difference between the actual Gross Revenues and $240,000. If the franchisee fails to pay this fee within 30 days of completing their year-end financial statements, Stretch Zone has the option to eliminate the franchisee's rights in the Limited Protected Territory or terminate the Franchise Agreement.