How are Stretch Zone franchise royalties calculated over the term of the franchise agreement?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalties are calculated as a percentage of franchise weekly fees over the term of the franchise agreement. Initial and successor franchise fees are payable by the franchisee upon signing a new franchise agreement or successor franchise agreement, and transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee. The Company's franchise royalties represent sales-based royalties that are related entirely to its performance obligation under the franchise agreement and are recognized as franchise sales occur.
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, royalties are calculated as a percentage of franchise weekly fees over the term of the franchise agreement. These royalties are sales-based and directly related to Stretch Zone's performance obligation under the franchise agreement, and they are recognized as franchise sales occur.
This means that as a Stretch Zone franchisee, you will pay a percentage of your weekly revenue as a royalty fee to Stretch Zone for the duration of your franchise agreement. The royalty payment is tied directly to your sales performance, so the more revenue you generate, the higher the royalty payment will be. This arrangement is typical in franchising, as it aligns the franchisor's income with the franchisee's success.
It's important for prospective franchisees to understand the specific percentage used to calculate these weekly royalty fees, as this will directly impact the profitability of their Stretch Zone franchise. While the excerpt specifies how the royalties are calculated, it does not state the exact percentage charged. Therefore, it is essential to carefully review the franchise agreement and ask Stretch Zone for clarification on the specific royalty percentage before signing any agreements.