What are the benefits of participating in the DMA Stretch Zone Regional Advertising Cooperative?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Stretch Zone Franchising, LLC, a Florida limited liability company; and franchisor of the Stretch Zone Franchises creates the DMA Cooperative as an unincorporated association organized for the furtherance of each Franchised Outlet and Company-Owned Outlet located in the DMA (the "Members") for sales and promotional efforts in connection with each Member's operation of a Stretch Zone Franchise Business (collectively the "Franchises") through the joint pooling of funds for a common advertising effort. The Members believe that the Franchises will be best served by a cooperative effort to coordinate the placement of advertising and promotional campaigns in the DMA in accordance with the terms of the DMA Membership Agreement that has been signed by all Members, as well as these Bylaws.
- (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. If the delinquent payments are not made within the 30-day cure period, the Franchisor may immediately terminate this Agreement and the Franchise Agreement for the Franchise Business upon notice to the Member without providing any additional time to cure.
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- ALLOCATION OF PROCEEDS. The funds collected by the DMA Cooperative from its Members will be used for any of the following expenditures as approved by the Members in accordance with the Bylaws and signed by the DMA Cooperative and the Franchisor in the form attached as Exhibit B:
- (a) Television and radio media placement;
- (b) Agency expenses relating to the placement of the advertising;
- (c) Point-of-Purchase (P.O.P.) materials for the DMA Cooperative's promotions; and
- (d) Administrative, professional fees and miscellaneous expenses related to the placement of advertising.
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's primary benefit is to further each member's sales and promotional efforts. This is achieved through the joint pooling of funds, which are then used to create and implement advertising and promotional campaigns within the Designated Marketing Area (DMA). The DMA Cooperative maintains a bank account for depositing advertising contributions and paying related expenses, with Stretch Zone Franchising, LLC having access for monitoring purposes. Members believe that a cooperative effort to coordinate advertising and promotional campaigns in the DMA will best serve the franchises.
Franchisees who are members of the DMA Cooperative have the right to vote on matters affecting the allocation of funds for advertising, the nature and type of advertising, the use of funds and placement of advertising, increases in member contributions, amendments to the Bylaws, the dissolution of the DMA Cooperative, and the election of officers. The funds collected by the DMA Cooperative from its members can be used for television and radio media placement, agency expenses related to advertising placement, point-of-purchase materials, and administrative/professional fees related to advertising.
However, participation also entails certain obligations. Members are required to make monthly contributions, up to 1% of their gross revenues, with the initial amount determined at the organizational meeting. Failure to make timely payments can result in interest charges of 1.5% per month and potential termination of the DMA Cooperative Agreement and the Franchise Agreement if payments are not made within a specified cure period. The DMA Cooperative is responsible for placing advertising that meets Stretch Zone's standards and submitting all advertising plans to Stretch Zone for prior approval. Stretch Zone retains the right to disapprove advertising campaigns it deems inappropriate or inconsistent with its standards.