When was the original celebrity endorsement contract extended to by Stretch Zone?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
o Financial Statements December 31, 2024 and 2023
NOTE F - CELEBRITY ENDORSEMENT AND MARKETING
In January 2021, the Company entered into an agreement with a board member whereby a celebrity endorsement contract was established for a term of four years with the ability for the Company to use the celebrity's likeness for an additional twelve months. Effective March 31, 2023, the celebrity resigned from the board of directors and is no longer considered a related party. The agreement calls for annual payments relating to increased royalty revenue, with a minimum payment for year one of $200,000. Effective June 2023, the agreement was modified to limit the payment to quarterly payments of $125,000, with the first payment due on September 30, 2023. The terms of the original contract were extended to December 31, 2028. The Company paid $500,000 and $632,497 for the years ended December 31, 2024, and 2023, respectively.
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 original celebrity endorsement contract, which was established in January 2021 for a term of four years, was extended on June 2023. The extension modified the payment terms to quarterly payments of $125,000, with the first payment due on September 30, 2023. The terms of the original contract were extended to December 31, 2028.
This extension means that Stretch Zone will continue to benefit from the celebrity's endorsement for a longer period. The modification of payment terms to quarterly installments of $125,000 provides a structured payment schedule. The company paid $500,000 and $632,497 for the years ended December 31, 2024, and 2023, respectively.
For a prospective franchisee, this indicates that Stretch Zone is investing in marketing and brand recognition through celebrity endorsements. The amortization of the celebrity endorsement was $121,568 and $97,297 for the years ended December 31, 2024 and 2023, respectively. This could positively impact the franchise's ability to attract customers and build a strong brand presence. However, franchisees should also consider how the cost of these endorsements may affect the overall financial health of the company.