How will Stretch Zone use the financial statements and information provided by the Guarantor?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
At any time this Guaranty is in effect, Guarantor will, upon 7-days prior written notice from the Franchisor, provide the Franchisor with a current financial statement and such other financial information as the Franchisor may reasonably request (including copies of Guarantor's filed federal and state income tax returns for the most recent taxable year).
The Franchisor agrees to keep confidential and not use such financial statements and information, except in connection with the administration or enforcement of the Franchise Agreement or this Guaranty.
The financial statements must be prepared in accordance with generally accepted accounting principles.
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, the franchisor agrees to keep confidential the financial statements and information provided by the Guarantor. Stretch Zone states that it will not use this information except when it is connected to the administration or enforcement of the Franchise Agreement or the Guaranty.
Stretch Zone can request a current financial statement and other financial information from the Guarantor with 7 days prior written notice. This includes copies of the Guarantor's filed federal and state income tax returns for the most recent taxable year. The financial statements provided must be prepared following generally accepted accounting principles.
This clause protects the Guarantor by limiting how Stretch Zone can use their private financial data, ensuring it is only used for legitimate purposes related to the franchise agreement and not shared or used for other reasons. This is a fairly standard practice in franchising when a personal guarantee is required, as it balances the franchisor's need for financial security with the guarantor's right to privacy.