Under what conditions can Big O Tires reduce the required contributions to the Local Fund?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
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(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
the amount Franchisee is required to spend for Advertising (by contributions to the Local Fund or otherwise), but, subject to the terms of certain documents already effective on this Agreement's Effective Date. The Local Group may not reduce this required expenditure below the four percent (4%) minimum, unless directed to do so by Big O, and such four percent (4%) may be subject to limitations and reductions as stated in Section 15.03(b).
- (b) Under Big O's current policies, for the Store subject to this Agreement:
- (i) the Local Fund contribution rate on sales to National Account Customers and Key Account Customers approved by Big O and/or on sales of Farm Class Tires may be set as low as 2%.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the standard minimum contribution to the Local Fund is four percent of a store's gross sales. However, this contribution rate can be reduced under certain conditions.
Specifically, the Local Fund contribution rate on sales to National Account Customers, Key Account Customers approved by Big O Tires, and/or on sales of Farm Class Tires may be set as low as 2%. Additionally, the minimum amount has been temporarily reduced to 3.6% of Gross Sales to partially offset increases to the National Marketing Program Percentage Fee, based on certain marketing programs that may be changed or terminated at Big O Tires' discretion after consulting with the Franchise Advisory Council.
Big O Tires also retains the discretion to periodically reduce contributions to the Local Fund based on policies they adopt. The Local Group may not reduce the required expenditure below the four percent (4%) minimum, unless directed to do so by Big O, and such four percent (4%) may be subject to limitations and reductions as stated in Section 15.03(b).