According to Stretch Zone's 2025 Franchise Disclosure Document, contract asset amortization is classified as commission expense. Contract assets represent commissions paid to various agents of Stretch Zone for franchise agreements. As of January 1, 2023, the contract asset balance was $33,300.

Stretch Zone amortizes these contract assets over the term of the franchise agreement, which is primarily 10 years. For the years ended December 31, 2024 and 2023, the contract asset amortization was $25,475 and $6,167, respectively.

This means that a portion of the commissions paid to agents for securing franchise agreements is recognized as an expense each year over the 10-year franchise term, rather than all at once when the commission is initially paid. This accounting treatment spreads the cost of acquiring franchise agreements over the period that Stretch Zone expects to benefit from those agreements.