Can Churchs Chicken require franchisees to participate in Regional Advertising Cooperatives (Ad Co-ops)?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Franchise Agreement, we may create Regional Advertising Cooperatives ("Ad Co-ops") and require your participation in them.
Under the Franchise Agreement, we may create Regional Advertising Cooperatives ("Ad Co-ops") and require your participation in them.
We have the right to form, change, dissolve or merge Ad Co-Ops. An Ad Co-Op may also be established if the owners of 80% of the Restaurants (franchised and owned by us) within the same DMA vote to do so and obtain our approval.
In conducting regional advertising, it is normal and customary to engage the services of a marketing agency to plan and place media, as well as perform other tasks. We reserve the right to require or approve the marketing agencies the Ad Co-Op uses. We also reserve the right to set standards that marketing agencies must meet and to withdraw our approval of an agency that does not meet those standards.
All franchisees must contribute to our Ad Fund. You must contribute to the Ad Fund each week 5% of your Restaurant's Gross Sales. However, we may require you to contribute a minimum of $25,000 per year to the Ad Fund. If we create an Ad Co-op and require your participation, you must still contribute 5% of your Restaurant's weekly Gross Sales to the Ad Fund. All franchisees contribute to the Ad Fund on the same basis (except that some older Franchise Agreements may provide for different contribution rates and certain franchisees in captive locations (e.g., food courts) may have a negotiated lower Ad Fund contribution rate).
We administer the Ad Fund and have the right to direct all spending by the Ad Fund.
We do not audit the Ad Fund on an annual basis. We do prepare an annual statement of monies collected and costs incurred by the Ad Fund and can provide it to you on written request.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 35–43)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, Churchs Chicken has the right to create Regional Advertising Cooperatives (Ad Co-ops) and require franchisee participation. Additionally, an Ad Co-Op may be established if 80% of the restaurants within the same Designated Market Area (DMA), both franchised and company-owned, vote to do so and receive Churchs Chicken's approval.
Churchs Chicken also reserves the right to mandate or approve the marketing agencies that the Ad Co-Op uses. They can also set standards for these marketing agencies and withdraw approval from any agency that fails to meet those standards. This gives Churchs Chicken significant control over the advertising and marketing strategies employed at the regional level.
All franchisees must contribute to the Ad Fund, which is separate from the Ad Co-Op. Franchisees are required to contribute 5% of their restaurant's gross sales each week to the Ad Fund. Churchs Chicken may also require a minimum annual contribution of $25,000. Even if an Ad Co-Op is created and franchisee participation is required, franchisees must still contribute 5% of their restaurant's weekly gross sales to the Ad Fund. This ensures a consistent revenue stream for advertising efforts, regardless of regional cooperative activities.
Churchs Chicken administers the Ad Fund and has the authority to direct all spending. While the Ad Fund is not audited annually, Churchs Chicken prepares an annual statement of monies collected and costs incurred, which is available to franchisees upon written request. This provides some level of transparency regarding the financial management of the Ad Fund.