How much was the amortization of celebrity endorsement for Stretch Zone in the later year?

According to Stretch Zone's 2025 Franchise Disclosure Document, the amortization of the celebrity endorsement was $121,568 for the year ended December 31, 2024, and $97,297 for the year ended December 31, 2023. The celebrity endorsement asset, valued initially at $533,250, is being amortized on a straight-line basis over five years, adjusted for any amendments or extensions to the agreement. This amortization reflects the expense recognized each year as the benefit of the celebrity endorsement is realized.

In September 2023, Stretch Zone issued 11,478 units of Class C units of the Parent, valued at $385,186, as additional compensation to the celebrity, which was included in the celebrity endorsement. The celebrity endorsement agreement, established in January 2021, allows Stretch Zone to use the celebrity's likeness for an additional twelve months beyond the initial four-year term. The agreement was modified in June 2023 to limit payments to quarterly installments of $125,000, with the first payment due on September 30, 2023, and the terms were extended to December 31, 2028.

For a prospective Stretch Zone franchisee, understanding the amortization of celebrity endorsements is crucial because it reflects a portion of the marketing and promotional expenses incurred by the company. While the celebrity endorsement aims to boost brand recognition and attract customers, the cost is spread out over the life of the agreement. Franchisees should consider how these marketing expenses contribute to their potential revenue and profitability. Additionally, the franchisee should inquire about the specific strategies and metrics used to measure the effectiveness of the celebrity endorsement in driving business to individual franchise locations.