How are advertising funds managed within the Stretch Zone Regional Advertising Cooperative?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| This Regional Advertising Cooperative Agreement (this "Agreement") is signed on among Stretch Zone Franchising, LLC, a Florida limited liability |
|---|
| company (the "Franchisor");, d/b/a Stretch Zone (the "Member"); |
| and DMA Stretch Zone Regional Advertising Cooperative, an |
| unincorporated association (the " DMA Cooperative"). |
| BACKGROUND |
| A. |
| The Franchisor and the Member are Franchisor and Franchisee respectively under a |
| Stretch Zone Franchise Agreement (the "Franchise Agreement") relating to a Franchised Business |
| within the Designated Marketing Area ("DMA"). |
| B. |
| Under Section 7.2 of the Franchise Agreement, the Franchisor has the right to |
| establish a Regional Advertising Cooperative in any DMA. |
| C. |
| This Agreement and Bylaws included in Exhibit A creates the DMA Cooperative for |
| the furtherance of each Member's sales and promotional efforts in connection with each Member's |
| operation of a Stretch Zone Franchise (collectively the "Franchises") and the Member's membership |
| in and participation with the DMA Cooperative. |
| The parties agree as follows: |
| TERMS |
| 1. |
| PURPOSE. |
| The purpose of the DMA Cooperative is the furtherance of each |
| Member's sales and promotional efforts in connection with the operation of their Stretch Zone |
| Franchises through the joint pooling of funds for the creation and placement of advertising and |
| promotional campaigns and plans in the DMA. The DMA Cooperative will open a bank account in |
| its name with Bank of America into which advertising contributions are deposited and from which the |
| expenses incurred are paid. The Franchisor will be granted access to the account for monitoring |
| purposes. |
3. MEMBERSHIP AND CONTRIBUTIONS.
(a) Qualification. Membership is open to all Stretch Zone Franchisees who are in good standing with Franchisor in the DMA and who sign this Agreement as required by the Franchise Agreement.
- TERM. This Agreement remains in effect until the Member ceases to be a Stretch
Zone Franchisee.
- (b) Voting Rights. The Member is entitled to 1 vote within the DMA Cooperative on each matter that is required to be submitted to a vote of the Members as described in Article 3, Section 3 of the attached Bylaws of the DMA Cooperative.
- (c) Contributions. The Member will contribute to the DMA Cooperative on a monthly basis, an amount not to exceed 1% of its Gross Revenues. The initial amount of monthly Contributions will be determined at the organizational meeting of the Members. All payments will be made through the ClubReady Electronic Payment system described in Section 3.3 of the Franchise Agreement. The amount of monthly Contributions to the DMA Cooperative will be reviewed and revised accordingly by majority vote of the Members at any regular meeting of the Members as provided in Article 4, Section 1 of the Bylaws.
- (d) Delinquent Payments. All late payments accrue interest at the rate of 1.5% per month beginning the date payment was due until fully paid or at the highest rate permitted by applicable state law, whichever is less, calculated on a daily basis.
- (e) Failure to Make Payments. If the Member fails to make 2 or more consecutive monthly contributions to the DMA Cooperative, the Franchisor may elect to terminate this Agreement and the Franchise Agreement for the Franchise Business if payment is not made within 30 days of receipt of the Franchisor's written demand for payment.
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, the DMA Cooperative is designed to boost sales and promotional activities for Stretch Zone franchises through pooled funds. These funds are used to create and implement advertising and promotional campaigns within the Designated Marketing Area (DMA). The DMA Cooperative maintains a bank account with Bank of America for depositing advertising contributions and paying expenses. Stretch Zone Franchising, LLC has access to this account for monitoring purposes.
Franchisees contribute to the DMA Cooperative monthly, with contributions not exceeding 1% of their gross revenues. The initial contribution amount is determined during the cooperative's organizational meeting. These contributions are processed through the ClubReady Electronic Payment system, as detailed in the Franchise Agreement. The amount of monthly contributions can be reviewed and adjusted by a majority vote of the members during regular meetings.
The funds collected by the DMA Cooperative are allocated for expenditures such as television and radio media placement, agency expenses for advertising placement, point-of-purchase materials, and administrative and professional fees related to advertising. Alternative uses of the funds are possible, provided that 67% of the members of the DMA Cooperative consent to the alternative use at a properly called meeting. The DMA Cooperative is responsible for placing advertising that meets Stretch Zone's standards and specifications, and all proposed advertising and promotional plans must be submitted to Stretch Zone for prior approval.
Late payments to the DMA Cooperative accrue interest at a rate of 1.5% per month, or the highest rate permitted by state law, calculated daily. If a member fails to make payments for two or more consecutive months, Stretch Zone has the option to terminate the DMA Cooperative Agreement and the Franchise Agreement if the payment is not made within 30 days of written demand. The DMA Cooperative must also notify Stretch Zone if any member fails to make the required monthly contributions.