How does the Advertising Cooperative contribution relate to the Local Advertising requirement for a Stretch Zone franchise?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
As of the date of this Disclosure Document, we have established two advertising cooperatives. Once an advertising cooperative is formed, Company-Owned Units whose limited protected territories are located within the DMA of the advertising cooperative must join the advertising cooperative and will have the same voting power as Franchised Units on all matters, including fees. The obligation of each Unit to contribute to an advertising cooperative (if formed in the applicable DMA) will not exceed 2% of monthly Gross Revenues. We will credit these contributions against your obligation for Local Advertising.
Source: Item 6 — ITEM -6 OTHER FEES (FDD pages 16–33)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, contributions to an advertising cooperative, if one is formed in the franchisee's Designated Market Area (DMA), can be credited against the franchisee's local advertising obligations. Company-owned Stretch Zone units within the same DMA as a franchised unit must also join the cooperative and have equal voting power on all matters, including fees. The contribution to the advertising cooperative is capped at 2% of monthly Gross Revenues.
This means that if a Stretch Zone franchisee is required to spend a certain amount on local advertising, their contributions to the advertising cooperative can offset that requirement, up to the 2% limit of gross monthly revenues. This setup ensures that both franchised and company-owned units in the same market area contribute to and have a say in local advertising strategies. The cooperative structure allows for a more coordinated and potentially more effective approach to local advertising, as decisions are made collectively.
For a prospective Stretch Zone franchisee, this is a potentially beneficial arrangement. By participating in an advertising cooperative, they can pool resources with other units and benefit from economies of scale in advertising. The 2% cap provides a clear limit on their contribution, and the ability to credit this against their local advertising obligation offers flexibility in how they allocate their marketing budget. However, franchisees should investigate whether an advertising cooperative exists or is planned for their DMA to fully understand the implications for their advertising spend.