Are cooperative advertising payments in addition to other sums franchisees are required to pay City Wide?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
CITY WIDE has the right to require cooperatives to be formed, dissolved or merged. For example, CITY WIDE may designate a local or regional advertising coverage area in which your Franchised Business and at least one other Franchised Business is located for purposes of developing a cooperative local or regional advertising or promotional program. You will contribute your share to such cooperative advertising and promotional program agreed upon by 50% or more of the Franchised Businesses within the designated dominant market area ("DMA") as defined by Nielsen Media Research, a company of the Dun & Bradstreet Corporation, or comparable industry designation. The cost of the program will be allocated among each CITY WIDE Franchised Business in such area and each franchisee's share will be in proportion to its Gross Sales during the preceding twelve-month period, or portion of that period. Such payments will be in addition to and exclusive of any other sums you are required to spend on advertising.
Currently, however, CITY WIDE has no franchisee cooperatives, but does have one franchisorowned outlet. CITY WIDE owned outlets do not have controlling voting power on fees imposed by any franchisee cooperatives formed in the future.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 29–36)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, payments made by franchisees to cooperative advertising programs are in addition to any other advertising expenses they are required to pay. City Wide has the right to mandate the formation, dissolution, or merging of advertising cooperatives. These cooperatives may be formed in a local or regional advertising coverage area where a franchisee's business and at least one other franchised business are located. Franchisees contribute to these programs if 50% or more of the franchisees in the designated dominant market area (DMA) agree to the program. Each franchisee's share of the cooperative's cost is proportional to their Gross Sales during the preceding twelve-month period.
Currently, City Wide does not have any franchisee cooperatives, but it does have one franchisor-owned outlet. It is important to note that City Wide-owned outlets do not have controlling voting power on fees imposed by any franchisee cooperatives formed in the future. This suggests that while City Wide can influence the formation of cooperatives, the franchisees themselves have a significant say in the advertising programs and their associated costs.
This arrangement means that franchisees need to budget not only for individual advertising and marketing efforts but also for potential cooperative advertising contributions. The amount can vary depending on the DMA's advertising program and the franchisee's gross sales. Prospective franchisees should inquire about the likelihood of cooperative formation in their area and the typical costs associated with such programs to accurately forecast their advertising expenses.