If Degree Wellness requires me to participate in an Advertising Cooperative, how is the amount I must contribute determined?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, from time to time, form local or regional advertising cooperatives ("Advertising Cooperative") to pay for the development, placement and distribution of advertising for the benefit of Studios located in the geographic region served by the Advertising Cooperative. Any Advertising cooperatives established by we will be operated solely as a conduit for the collection and expenditure of Advertising Cooperative fees for the aforementioned purposes. If we form an Advertising Cooperative for the region in which your Studio is located, you agree to participate in the Advertising Cooperative pursuant to the terms of this Section 11.3 in the amount we determine.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, if Degree Wellness forms a local or regional advertising cooperative for the area in which your studio is located, you are required to participate. The amount you must contribute to the Advertising Cooperative will be determined by Degree Wellness. These Advertising Cooperatives are designed to facilitate the collection and expenditure of advertising fees to benefit studios within the cooperative's geographic region.
Degree Wellness emphasizes that these advertising cooperatives serve solely as a conduit for collecting and spending advertising fees for the benefit of the participating studios. This means the cooperative is intended to be a pass-through entity, focusing on managing and distributing advertising funds rather than generating profit or engaging in other business activities.
As a franchisee, it is important to note that Degree Wellness has the authority to determine the contribution amount for these advertising cooperatives. While the FDD specifies that contributions to the Brand Fund are a percentage of gross revenues, the method for determining contributions to Advertising Cooperatives is less defined, leaving Degree Wellness with discretion in setting the amount. Therefore, a prospective franchisee should seek clarification from Degree Wellness regarding how these amounts are determined and what factors are considered to ensure fairness and transparency.