What is Stretch Zone's role as custodian of the pooled marketing funds?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
In 2024, the Company introduced a new marketing program that allows franchisees to allocate funds monthly into a pooled account, with the Company acting as the custodian. These funds are classified as restricted cash on the Company's balance sheet. Although the Company holds these funds, it does not have control over them. The funds are reserved exclusively for the benefit of the franchisees and are used solely for marketing purposes as determined by the franchisees.
The pooled account is designed to enhance the marketing efforts of franchisees by providing a centralized fund that can be used for collective marketing campaigns, promotional activities, and other initiatives aimed at increasing brand visibility and customer engagement. Franchisees contribute a predetermined amount each month, which is then managed by the Company in accordance with the terms of the marketing program.
The Company's role as custodian involves ensuring the proper allocation and usage of the funds, maintaining accurate records, and providing regular reports to the franchisees on the status and utilization of the pooled account. Despite holding the funds, the Company does not have the authority to use them for any purposes other than those specified by the franchisees. The funds remain restricted and are not available for the Company's operational needs or other expenses.
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, Stretch Zone introduced a new marketing program in 2024 where franchisees can allocate funds monthly into a pooled account. Stretch Zone acts as the custodian of these funds, which are classified as restricted cash on the company's balance sheet. Although Stretch Zone holds these funds, it does not have control over them. The funds are reserved exclusively for the benefit of the franchisees and are used solely for marketing purposes as determined by the franchisees.
This pooled account is designed to enhance the marketing efforts of franchisees by providing a centralized fund that can be used for collective marketing campaigns, promotional activities, and other initiatives aimed at increasing brand visibility and customer engagement. Franchisees contribute a predetermined amount each month, which is then managed by Stretch Zone in accordance with the terms of the marketing program.
Stretch Zone's role as custodian involves ensuring the proper allocation and usage of the funds, maintaining accurate records, and providing regular reports to the franchisees on the status and utilization of the pooled account. Despite holding the funds, Stretch Zone does not have the authority to use them for any purposes other than those specified by the franchisees. The funds remain restricted and are not available for Stretch Zone's operational needs or other expenses. This arrangement ensures that marketing funds are used solely for the benefit of the franchisees, enhancing their local marketing efforts and brand awareness.