What are the key components of the Regional Advertising Cooperative Agreement for Stretch Zone?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
ton | Pending | | Wisconsin | May 1, 2025 |
EXHIBIT P – FORM OF REGIONAL ADVERTISING COOPERATIVE AGREEMENT
REGIONAL ADVERTISING COOPERATIVE AGREEMENT
| 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. 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.
Provided the expenditures relate directly to advertising and promotions, other use of funds may be agreed upon by consent of 67% of the Members of the DMA Cooperative present at a meeting to decide on an alternative use of funds, called and held in accordance with Article 3 of the Bylaws.
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 Regional Advertising Cooperative Agreement outlines several key components for franchisees. The DMA Cooperative's primary purpose is to enhance sales and promotional activities through pooled funds, which are used to create and implement advertising and promotional campaigns within the Designated Marketing Area (DMA). A bank account is established under the DMA Cooperative's name at Bank of America for depositing advertising contributions and covering incurred expenses, with the Franchisor having access for monitoring purposes. This ensures transparency and accountability in fund management.
Franchisees, as members of the DMA Cooperative, have specific rights and responsibilities. Each member is entitled to one vote on matters requiring a member vote, as detailed in the DMA Cooperative's Bylaws. Members contribute monthly, with the amount not exceeding 1% of their Gross Revenues. The initial contribution amount is determined during the organizational meeting, and adjustments can be made via a majority vote at regular meetings. Payments are processed through the ClubReady Electronic Payment system, ensuring streamlined transactions.
Delinquent payments are subject to an interest rate of 1.5% per month, calculated daily, or the highest rate permitted by state law, whichever is lower. Failure to make payments can lead to serious repercussions; if a member misses two or more consecutive monthly contributions, Stretch Zone may terminate the Regional Advertising Cooperative Agreement and the Franchise Agreement if payment is not made within 30 days of written demand. Funds collected by the DMA Cooperative are allocated for expenditures such as television and radio media placement, agency expenses, point-of-purchase materials, and administrative and professional fees, all subject to member approval and the Franchisor's signature. The agreement remains effective as long as the member is a Stretch Zone franchisee.