How is the Development Fee calculated for a Stretch Zone Area Development Agreement to develop 7 or more Franchise Businesses?

According to Stretch Zone's 2025 Franchise Disclosure Document, the development fee for an Area Development Agreement to develop 7 or more franchise businesses is calculated by combining two components related to the Initial Franchise Fees. First, 100% of the Initial Franchise Fees are calculated for 50% of the total number of franchise businesses to be developed under the agreement. Second, 50% of the Initial Franchise Fees are calculated for the remaining 50% of the franchise businesses to be developed. The development fee is the sum of these two calculations. The balance of any Initial Franchise Fee is due when the franchisee signs the individual Franchise Agreement for each location.

For example, if an Area Development Agreement is for 10 franchise businesses, the development fee would be calculated as follows: 100% of the Initial Franchise Fees for 5 businesses, plus 50% of the Initial Franchise Fees for the other 5 businesses. The remaining balance of the initial franchise fee for each of the 10 locations would be due when signing each individual franchise agreement.

It is important to note that the Development Fee is fully earned by Stretch Zone upon signing the Area Development Agreement. This means that the fee is non-refundable, even if the franchisee does not ultimately develop all of the agreed-upon franchise businesses. Prospective franchisees should carefully consider their ability to meet the development schedule before entering into an Area Development Agreement with Stretch Zone.