At what rate do late payments to the Stretch Zone DMA Cooperative accrue interest?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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 the 2025 Stretch Zone Franchise Disclosure Document, late payments to the DMA Cooperative accrue interest. Specifically, all late payments accrue interest at a rate of 1.5% per month, calculated on a daily basis, from the date the payment was originally due until it is fully paid.
However, the interest rate is subject to a legal maximum. The FDD states that the 1.5% monthly interest rate applies "or at the highest rate permitted by applicable state law, whichever is less." This means that if the state where the Stretch Zone franchise is located has a law that sets a maximum interest rate lower than 1.5% per month, that lower rate will apply.
Furthermore, failure to make timely payments can lead to more serious repercussions. If a Stretch Zone franchisee misses two or more consecutive monthly contributions to the DMA Cooperative, Stretch Zone has the right to terminate both the DMA Cooperative Agreement and the Franchise Agreement, provided that payment is not made within 30 days of receiving written demand for payment from Stretch Zone. If the franchisee does not cure the delinquent payments within this 30-day period, Stretch Zone can immediately terminate both agreements upon notice, without offering any additional time to remedy the situation.