If my contribution to an Alloy Cooperative is less than my local advertising requirement, must I still spend the difference locally?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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, if a franchisee's contribution to a Cooperative is less than their local advertising requirement, they must still spend the difference locally. The amount a franchisee contributes to the Cooperative is determined by a vote of the members, but it will not be more than 1% of Gross Sales unless the members vote to exceed that amount.
This means that even if an Alloy franchisee participates in a Cooperative for marketing and advertising, they are still responsible for meeting their local advertising requirements. If the Cooperative contribution doesn't cover the full local requirement, the franchisee needs to allocate additional funds to local marketing efforts. This ensures consistent local promotion of the Alloy brand, regardless of Cooperative activities.
Currently, there are no Cooperatives in the Alloy system, but Alloy may designate any geographic area in which two or more Facilities are located as a region for purposes of establishing a local or regional advertising group or marketing cooperative. If a Cooperative is established during the term of the Franchise Agreement, the franchisee must become a member of the Cooperative. All promotional and advertising materials proposed to be used by an Advertising Group must be approved by Alloy prior to use.