Under what condition is a Stretch Zone franchisee not required to spend the minimum Local Advertising Contributions?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Your Expenditures. You must spend a minimum of $2,000 per month on Local Advertising of your Franchised Business within your DMA.
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 Stretch Zone's 2025 Franchise Disclosure Document, a franchisee is generally required to spend a minimum of $2,000 per month on local advertising within their designated market area (DMA). However, this requirement is waived if Stretch Zone requests the franchisee to become a member of a Regional Advertising Cooperative for their DMA. In this case, the franchisee's local advertising contributions are directed to the cooperative rather than being spent independently.
This means that Stretch Zone has the discretion to establish Regional Advertising Cooperatives and require franchisees to participate. If a franchisee is part of such a cooperative, their advertising funds are pooled with other franchisees and company-owned units in the region, and the cooperative manages the advertising efforts. The franchisee does not have to be a member of more than one Regional Advertising Cooperative.
For a prospective Stretch Zone franchisee, this implies that the actual control over local advertising spending may vary. In some areas, franchisees will have direct control over how their $2,000 is spent each month, subject to Stretch Zone's approval of advertising materials. In other areas, franchisees will contribute to a regional cooperative, giving them less direct control but potentially benefiting from larger-scale, coordinated advertising campaigns. It is important for potential franchisees to understand whether a Regional Advertising Cooperative is planned or already in place for their DMA, as this will significantly impact their advertising strategy and control.