In Indiana, can Degree Wellness require franchisees to participate in advertising campaigns with indeterminate expenses, or expenses determined by a third party or formula, if the Franchise Agreement specifies a maximum percentage of gross monthly sales or a maximum absolute sum?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
Recognizing the value of advertising and branding to the goodwill and public image of Studio franchises, we will establish, maintain and administer an advertising fund (the "Fund") for such brand development as we may deem necessary or appropriate in our sole discretion.
You agree to contribute to the Fund in the amount of one percent (1%) of the gross revenues of the Franchise.
We will provide you with 60 days' advance notice of the establishment or termination of the Fund and any change in the required contribution.
These contributions will be payable weekly with and at the same time as your Continuing Franchise Fees payable under Paragraph 6.2 above.
At no time during the term of this Agreement will your contribution to the Fund exceed 2% of gross revenue.
A further description of the Fund and your obligations with respect to advertising and promoting the Franchise is found in Section 11 of this Agreement.
- b.
In the future, we may also establish a program to provide additional marketing services to Studio franchises involving the placement of clients on a local basis to perform marketing activities.
This program would be required for all Studio franchises.
You agree to pay the reasonable fee as determined by us.
We reserve the right to change the amount of this fee at any time.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Illinois addendum states that Illinois law governs the Franchise Agreement. The FDD does not contain an addendum for Indiana. Therefore, it is not possible to determine from this document whether Degree Wellness can require franchisees in Indiana to participate in advertising campaigns with indeterminate expenses, or expenses determined by a third party or formula, if the Franchise Agreement specifies a maximum percentage of gross monthly sales or a maximum absolute sum. The franchise agreement should be consulted to determine the answer to this question.
However, the FDD does state that Degree Wellness will establish, maintain, and administer an advertising fund. Franchisees must contribute 1% of gross revenues to the fund, payable weekly along with continuing franchise fees. The contribution to the fund will not exceed 2% of gross revenue.
Degree Wellness may also establish a program to provide additional marketing services to studio franchises involving the placement of clients on a local basis to perform marketing activities. This program would be required for all studio franchises, and franchisees agree to pay a reasonable fee as determined by Degree Wellness, who reserves the right to change the amount of this fee at any time.