What is an 'Advertising Group' or 'Cooperative' for Alloy franchisees?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
We may designate any geographic area in which two or more Facilities are located as a region for purposes of establishing a local or regional adverting group or marketing cooperative ("Advertising Group" or "Cooperative"). The members of any Advertising Group or Cooperative
for any area will consist of all Alloy Facilities, whether operated by us, our affiliates or our franchisees. We have the right to dissolve, merge or change the structure of the Groups or Cooperatives.
We reserve the right to form Advertising Groups based on specific criteria determined by us for designated marketing areas. We have the right to establish how Advertising Groups operate. If an Advertising Group is established in your market, you will be designated to be a member of that Advertising Group. We will determine the amount of member contribution. Your contribution will count towards any required minimum local marketing spending. All promotional and advertising materials proposed to be used by an Advertising Group must be approved by us prior to use.
A Cooperative will be a more formal entity, organized for the exclusive purposes of administering marketing programs and developing promotional materials for use by the members, subject to our approval as described above. If a Cooperative has been established for a geographic area where your Facility is located when the Franchise Agreement is signed, or if any Cooperative is established during the term of the Franchise Agreement, you must become a member of the Cooperative. If the Cooperative will operate according to written documents, we must approve of these documents, and a copy of the Cooperative documents applicable to the geographic area in which your Facility will be located will be provided to you if you request it. You will not have to participate in more than one Cooperative.
The payments you make to a Cooperative may be applied by you toward satisfaction of your local marketing requirement. If the amount you contribute to a Cooperative is less than your local advertising requirement, you must still spend the difference locally. By vote of the members, the members will determine the amount that each member must contribute to the Cooperative, but the amount you must contribute will not be more than 1% of Gross Sales, unless the members of the Cooperative vote to exceed that amount. All contributions to the Cooperative will be maintained and administered in accordance with the documents governing the Cooperative, if any. The Cooperative will be operated solely as a conduit for the collection and expenditure of the Cooperative fees for the purposes outlined above. No marketing or promotional plans or materials may be used by the Cooperative or furnished to its members without first obtaining our approval, as described above under "Local Marketing". Currently there are no Cooperatives in the System. The Cooperative is not required to prepare an annual financial statement.
Each Cooperative member, including us or our affiliates, will have one vote on all Cooperative matters, but no franchisee (or commonly controlled group of franchisees) will have greater than 25% of the total vote.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 31–42)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, an Advertising Group or Cooperative is a marketing initiative that Alloy may establish in geographic areas where two or more Alloy facilities are located. These groups consist of all Alloy facilities in the area, including those operated by Alloy, its affiliates, or franchisees. Alloy retains the right to dissolve, merge, or change the structure of these groups. If Alloy establishes an Advertising Group in a franchisee's market, the franchisee will be required to join. Alloy determines the amount of member contribution, which counts toward any required minimum local marketing spending. All advertising materials used by the group must be approved by Alloy.
A Cooperative is described as a more formal entity organized to administer marketing programs and develop promotional materials for its members, subject to Alloy's approval. If a Cooperative exists in the franchisee's area when they sign the Franchise Agreement, or if one is established later, the franchisee must become a member. Alloy must approve the Cooperative's written documents, and a copy will be provided to the franchisee upon request. Franchisees will not have to participate in more than one Cooperative.
The payments made to a Cooperative can be applied toward the franchisee's local marketing requirement. If the contribution to the Cooperative is less than the local advertising requirement, the franchisee must spend the difference locally. The members determine the contribution amount, but it cannot exceed 1% of Gross Sales unless the members vote to exceed that amount. All contributions are managed according to the Cooperative's governing documents. The Cooperative operates solely to collect and spend fees for the outlined purposes, and all marketing plans and materials require Alloy's approval. Currently, there are no Cooperatives in the Alloy system, and the Cooperative is not required to prepare an annual financial statement. Each Cooperative member, including Alloy or its affiliates, has one vote on all matters, but no franchisee can have more than 25% of the total vote.