What are the quarterly payments to the celebrity under the modified agreement with Stretch Zone?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
al 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 company modified its agreement with a celebrity endorser in June 2023. The modification limited the payment to quarterly installments of $125,000, with the first payment due on September 30, 2023. The original agreement was extended to December 31, 2028.
This arrangement replaced the previous annual payment structure tied to increased royalty revenue, which had a minimum payment of $200,000 in the first year. In 2023, Stretch Zone paid the celebrity $632,497 before the agreement was modified.
For a prospective franchisee, this celebrity endorsement deal could impact marketing and brand recognition efforts. The consistent quarterly payments suggest a long-term commitment to leveraging the celebrity's image to promote the Stretch Zone brand. However, franchisees should be aware that these endorsement costs are factored into the overall financial structure of the franchise, potentially influencing royalty fees or marketing fund contributions.