Under what conditions can the minimum 4% contribution to the Big O Tires Local Fund be reduced?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
The members of the Local Groups that have these Local Funds may agree to increase or decrease the current fees, except that the amount of the advertising contributions may not be decreased below the minimum amount described above without our approval; however, we may provide that: (a) the Local Fund contribution rate on sales to National Account Customers and Key Account Customers approved by us and/or on sales of Farm Class Tires may be set at 2%, and (b) contributions to the Local Fund by one Store may be 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 the system-wide average Store sales for the previous calendar year (See Item 6, Note 3). (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.)
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEM AND TRAINING (FDD pages 55–73)
What This Means (2025 FDD)
According to the 2025 Big O Tires Franchise Disclosure Document, the standard 4% contribution to the Local Fund can be reduced under specific circumstances with Big O Tires' approval. The contribution rate may be reduced to 2% on sales to National Account Customers and Key Account Customers approved by Big O Tires, as well as on sales of Farm Class Tires.
Additionally, the contribution to the Local Fund by a Big O Tires store may be capped each calendar year at 4% (or a lower amount if the required Local Fund contribution is less than 4%) of the greater of $2.7 million or twice the system-wide average store sales for the previous calendar year. For franchisees operating under older franchise agreements, the $2.7 million minimum cap may be slightly lower, at $2.5 million.
These exceptions provide some flexibility for franchisees based on the type of sales they make and the overall sales volume of their store. It's important for prospective franchisees to understand these conditions and how they might impact their contributions to the Local Fund, as these funds are used for local advertising and marketing efforts that benefit all franchisees in the area.