What obligations does a Stretch Zone franchisee have under the Regional Advertising Cooperative Agreement?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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.
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, franchisees who are members of the DMA Cooperative have several obligations. They must contribute to the DMA Cooperative on a monthly basis, with contributions not exceeding 1% of their Gross Revenues. The initial amount is determined at the organizational meeting. These contributions are made through the ClubReady Electronic Payment system, as described in Section 3.3 of the Franchise Agreement. The amount of monthly contributions can be reviewed and revised by a majority vote of the members at regular meetings.
Stretch Zone franchisees are also obligated to ensure timely payments. Late payments accrue interest at a rate of 1.5% per month, calculated daily, or at the highest rate permitted by applicable state law, whichever is less. Failure to make two or more consecutive monthly contributions can lead to the termination of the Regional Advertising Cooperative Agreement and the Franchise Agreement if payment is not made within 30 days of receiving written demand from Stretch Zone Franchising, LLC.
Additionally, Stretch Zone franchisees have voting rights within the DMA Cooperative, with each member entitled to one vote on matters requiring a member vote, as detailed in Article 3, Section 3 of the DMA Cooperative's Bylaws. The funds collected by the DMA Cooperative are used for expenditures such as television and radio media placement, agency expenses, point-of-purchase materials, and administrative and professional fees, all of which must be approved by the members and Stretch Zone Franchising, LLC, as outlined in the Bylaws.