What is the maximum Local Fund contribution for a Big O Tires store, and how is it calculated?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Advertising contributions by one Store to its Local Fund are capped for each applicable calendar year at 4% (or such lower amount equal to the required Local Fund contribution then in effect) of the greater of $2.7 million or twice an approximation of the system-wide average Store sales for each prior 12 month period ending on October 31 of each year. For example, if the System-wide average Store sales for a given year are $1,500,000, and the then effective Local Fund minimum contribution percentage is 4%, the maximum contribution per Store would be $120,000 (2 X $1,500,000 = $3,000,000; X 4% = $120,000.) Under our current policies, this advertising contribution cap may start for a franchisee for the calendar year beginning on the first January 1 after the date of the franchisee's Franchise Agreement. The approximation of the system-wide average Store sales for each 12 month period will be calculated in accordance with policies periodically established by Big O in its discretion (for instance, this average is now calculated based on retail sales of the middle 80% of comparable Stores) and will be communicated by Big O no later than December 31 of that year. (For certain
franchisees operating under older forms of our Franchise Agreement, the $2.7 million minimum cap measure is slightly lower, at $2.5 million.)
- c.
Source: Item 6 — OTHER FEES (FDD pages 21–35)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the maximum advertising contributions to the Local Fund are capped at 4% of a store's gross sales. This 4% is applied to the greater of either $2.7 million or twice the approximation of the system-wide average store sales for the prior 12-month period ending on October 31st of each year.
For example, if the system-wide average store sales are $1,500,000, the maximum contribution would be $120,000. This is calculated by doubling the average sales ($1,500,000 x 2 = $3,000,000) and then applying the 4% contribution rate ($3,000,000 x 0.04 = $120,000). For franchisees operating under older agreements, the $2.7 million minimum cap is slightly lower at $2.5 million.
Big O Tires determines the system-wide average store sales based on policies they establish, currently using retail sales from the middle 80% of comparable stores. This average is communicated to franchisees by December 31st of each year. The advertising contribution cap may start for a franchisee for the calendar year beginning on the first January 1 after the date of the franchisee's Franchise Agreement. The Local Fund contribution is non-refundable.