What is the term length of the celebrity endorsement contract for Stretch Zone?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
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Notes to Financial Statements December 31, 2023 and 2022
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. The Company paid $632,497 and $725,013 for the years ended December 31, 2023, and 2022, respectively. Effective June 2023, the agreement was m
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 entered into a celebrity endorsement contract in January 2021 with a board member. The original term of the contract was four years, with an additional twelve months for the company to use the celebrity's likeness.
However, the terms of the original contract were later extended to December 31, 2028. This extension occurred even after the celebrity resigned from the board of directors in March 2023 and was no longer considered a related party.
The agreement also involved payments tied to increased royalty revenue, with a minimum initial payment of $200,000. The company made payments of $632,497 and $725,013 for the years ending December 31, 2023, and 2022, respectively. Subsequently, in June 2023, the payment structure was modified to quarterly payments of $125,000, starting on September 30, 2023.