If a local advertising cooperative is formed, is an Aw franchisee required to participate?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to your individual local advertising, marketing and promotional expenditures and contributions to the Marketing Fund, if a local or regional advertising cooperative is formed either by us or by Papa Ray's Pizza franchisees and approved by us in your area or region, you agree to participate in such cooperative and contribute to the cooperative in the amount and manner agreed upon by a majority of the members of the cooperative.
Each of the Papa Ray's Pizza Restaurants in the cooperative, whether franchised or company-owned or affiliate-owned, shall have one vote in the cooperative.
Contributions made by you to the cooperative will be credited to your local advertising expenditure requirements in Section 12.2 above.
We assume no direct or indirect liability or obligation to you or to any advertising cooperative with respect to the maintenance, direction or administration of the cooperative, including without limitation, any failure by franchisees to make required contributions to the cooperative.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if a local or regional advertising cooperative is formed, franchisees are generally required to participate. This cooperative can be formed either by Aw itself or by the Papa Ray's Pizza franchisees, but it must be approved by Aw.
The amount and manner of contribution to the cooperative is determined by a majority vote of the members within the cooperative. Each Papa Ray's Pizza Restaurant in the cooperative, whether it is franchised, company-owned, or affiliate-owned, has one vote. Contributions made to the cooperative can be credited toward the franchisee's local advertising expenditure requirements.
Aw assumes no direct or indirect liability or obligation regarding the maintenance, direction, or administration of the cooperative. This includes any failure by franchisees to make the required contributions. This arrangement is fairly common in franchising, allowing for both national-level marketing controlled by the franchisor and local efforts driven by franchisees, but it does mean franchisees must be prepared to collaborate and potentially contribute to a cooperative advertising fund in addition to other marketing expenses.