What is the purpose of the Regional Advertising Cooperative Agreement for Stretch Zone franchisees in a DMA?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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. |
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, also referred to as the DMA Cooperative, is designed to enhance the sales and promotional activities of Stretch Zone franchises within a specific Designated Marketing Area (DMA). This is achieved through the collective pooling of funds to create and implement advertising and promotional campaigns. The DMA Cooperative's funds are deposited into a dedicated bank account, managed by the cooperative, with Stretch Zone Franchising, LLC having access for monitoring purposes. This ensures that advertising efforts are coordinated and aligned with the brand's overall marketing strategy.
Each Stretch Zone franchisee that is a member of the DMA Cooperative is entitled to one vote on matters affecting the allocation of funds for advertising, the nature and type of advertising, the use of funds, increases in member contributions, amendments to the cooperative's bylaws, the dissolution of the cooperative, and the election of officers. The officers then handle all other decisions related to the operation of the DMA Cooperative and the contracting for advertising production and placement. This democratic process ensures that franchisees have a say in how their advertising dollars are spent and that the cooperative operates in their best interests.
Franchisees 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, and adjustments can be made by a majority vote of the members at regular meetings. Failure to make timely payments results in interest accrual at a rate of 1.5% per month, and consistent failure to pay can lead to termination of the agreement and the franchise agreement itself if the payments are not made within 30 days of written demand from Stretch Zone. The funds collected are used for expenditures such as television and radio media placement, agency expenses, point-of-purchase materials, and administrative fees, all aimed at boosting the visibility and sales of Stretch Zone franchises within the DMA.