Under what condition will a Stretch Zone franchisee be required to become a member of a Regional Advertising Cooperative?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that we have the right to establish a Regional Advertising Cooperative in any DMA. Upon our request, you will immediately become a member of the Regional Advertising Cooperative for the DMA that includes your Limited Protected Territory. Your Franchise Business does not have to be a member of more than 1 Regional Advertising Cooperative. All Company-Owned Units within your DMA must also become members of the Regional Advertising Cooperative. There will be governing documents available for your review.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, a franchisee will be required to become a member of a Regional Advertising Cooperative upon the franchisor's request, specifically for the Designated Market Area (DMA) that includes the franchisee's Limited Protected Territory. The franchisee must join the Regional Advertising Cooperative immediately after the request is made. A Stretch Zone franchise business is not required to be a member of more than one Regional Advertising Cooperative. All Company-Owned Units within the DMA must also become members of the Regional Advertising Cooperative. Governing documents will be available for franchisee review.
Stretch Zone has the right to establish a Regional Advertising Cooperative in any DMA. These cooperatives are organized exclusively for administering advertising programs and developing standardized promotional materials for use by its members. While the Regional Advertising Cooperative can adopt its own rules and procedures, Stretch Zone must approve them, and these rules cannot restrict or expand the franchisee's rights or obligations under the Franchise Agreement. Any lawful action of the Regional Advertising Cooperative at a meeting attended by 67% of the members, including assessments for Local Advertising, binds a franchisee if approved by 67% of the members present. Each Franchised Unit and Company-Owned Unit has 1 vote.
Franchisees are required to contribute to the Regional Advertising Cooperative, with contributions capped at 2% of the member's monthly Gross Revenues. This contribution is credited against the franchisee's obligation for Local Advertising. Members must submit their contribution, along with any required statements or reports, to the Regional Advertising Cooperative by the 10th day of each month for the preceding calendar month. The Regional Advertising Cooperative will prepare quarterly unaudited reports of its advertising and marketing expenditures, which will be sent to its members and to Stretch Zone.
Stretch Zone retains significant control over the Regional Advertising Cooperative, including the approval of all advertising or promotional plans or materials. In the event of an impasse among members that affects the establishment or effective functioning of the Regional Advertising Cooperative, Stretch Zone's resolution of the issue is final and binding. Furthermore, Stretch Zone has the right to form, change, dissolve, or merge any Cooperative.