Under what conditions can Stretch Zone terminate the Area Development Agreement due to a default?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Area Development Agreement | Summary |
|---|---|---|
| termination or expiration of the Area Development Agreement, all your Area Development Rights cease rights cease. We are then free to open Company Owned Businesses or franchise Stretch Zone Franchises to others within your former Development Area but outside any Limited Protected Territories granted to you under Franchise Agreements for Franchise Businesses you are currently operating or are under construction, provided you are not in otherwise in default under any Franchise Agreement. | ||
| h. "Cause" defined – non-curable defaults | Section 7.2 | We may terminate the Area Development Agreement by giving you written notice of termination if we terminate any Franchise Agreement between the parties due to your default, after we have given you written notice of default if notice is required, and afforded you an opportunity to cure if you have a right to cure. |
| i. Your obligations on termination/ nonrenewal | Sections 4.1 and 7.4 | Upon termination or expiration of the Area Development Agreement, all your Area Development Rights cease rights cease. If we terminate the Area Development Agreement for your failure to meet the Development Schedule, you will retain all rights under the Franchise Agreements for the Franchise Businesses you have under lease, construction or in operation at that time, as long as you are not otherwise in default under those Franchise Agreements. You must comply with your post-termination and post-expiration obligations under the Franchise Agreements and those obligations that survive the termination or expiration of the Franchise Agreements including the obligations of indemnification, confidentiality and non-competition. |
| j. Assignment of contract by us | Section 5.1 | We have the absolute right to transfer, assign or delegate all or any part of our rights or obligations under the Area Development Agreement to any person without your consent or approval. |
| k. "Transfer" by you defined | Section 5.2 | Transfer means any sale, assignment, transfer, conveyance or gift of any direct or indirect interest in your Area Development Agreement. A transfer of less than 50% of the equity interests in Business Entity that signed the Area Development Agreement and a transfer to any other original owners of the Area Development Agreement is not considered a transfer. |
| l. Our approval of transfer by you m. Conditions for our | Section 5.2 Section 5.2 | You must obtain our prior written approval of any transfers. You may transfer the Area Development Agreement to a |
| approval of transfer | Business Entity you own but you continue to remain personally liable for all of your obligations under the |
Source: Item 17 — ITEM -17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 65–73)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, Stretch Zone can terminate the Area Development Agreement with cause. There are two types of defaults that can trigger termination: curable defaults and non-curable defaults.
For curable defaults, Stretch Zone must provide the franchisee with written notice of the default and an opportunity to cure it. The franchisee has 30 days, or any longer period required by applicable law, to cure the default and provide satisfactory evidence of the cure to Stretch Zone. If the franchisee fails to cure the default within the given timeframe, Stretch Zone has the right to terminate the Area Development Agreement upon written notice of termination. The franchisee bears the burden of proving they have timely cured any curable default.
For non-curable defaults, Stretch Zone may terminate the Area Development Agreement by giving the franchisee written notice of termination if Stretch Zone terminates any Franchise Agreement between the parties due to the franchisee's default. This is after Stretch Zone has given the franchisee written notice of default, if notice is required, and an opportunity to cure if the franchisee has a right to cure. Upon termination or expiration of the Area Development Agreement, all Area Development Rights cease.