To whom can Big O Tires direct the Local Fund contributions to be paid?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Franchisee shall also contribute by the Due Date a minimum of four percent (4%) of its Store's Gross Sales for the previous month to Big O or as directed by Big O; provided, however, that such contributions may be reduced periodically at times, in circumstances and on conditions set forth in policies adopted by Big O from time to time in its sole discretion. If a Local Fund has been established by a Local Group in Franchisee's marketing area, Big O may, in its discretion, direct that all or any part of that contribution be (i) paid to the Local Fund formed by the Local Group for the purpose of local Advertising and operated pursuant to such structure and guidelines as Big O may prescribe or approve or (ii) paid to Big O, which may include all or some of such payment in a Local Fund administered by it or may forward all or some of such payment to the Local Fund formed by the Local Group. From time to time, the Local Group may agree to increase
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, franchisees must contribute a minimum of 4% of their store's gross sales to the Local Fund. Big O Tires has the discretion to direct these contributions either to Big O Tires itself, or to a Local Fund established by a Local Group within the franchisee's marketing area.
If Big O Tires directs the contributions to a Local Fund, the funds are to be used for local advertising. This Local Fund is operated according to a structure and guidelines that Big O Tires prescribes or approves. Alternatively, Big O Tires may choose to receive the contributions directly, and then either administer the Local Fund itself or forward the payments to the Local Fund managed by the Local Group.
Big O Tires also has the right to adjust the required advertising expenditure, and the Local Group may agree to increase the amount franchisees are required to spend on advertising, subject to Big O Tires' approval. However, the Local Group cannot reduce the required expenditure below the 4% minimum unless Big O Tires directs them to do so. This gives Big O Tires significant control over how local advertising funds are collected and spent, regardless of whether they are managed directly by Big O Tires or by a Local Group.