Can Fitstop require a franchisee to acquire services/collateral from approved suppliers for their LMR?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.4.2 You must expend the minimum amount equal to 1% of the Gross Revenue generated by the Franchised Business during the preceding calendar month of operations to market, promote and advertise the Franchised Business within the Designated Territory (the "Local Marketing Requirement" or "LMR"). We may require that all or some portion of your LMR be expended on services/collateral that you must acquire from one (1) or more of our then-current Approved Suppliers. Upon our request, you must provide us with invoices or other proof of your monthly expenditures on local advertising and marketing.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees are required to spend a minimum of 1% of their gross revenue on local marketing. Fitstop retains the right to mandate that all or a portion of this Local Marketing Requirement (LMR) be spent on services or collateral acquired from their approved suppliers.
This means that Fitstop franchisees may not have complete control over how they allocate their local marketing budget. While they are required to spend at least 1% of gross revenue on marketing within their designated territory, Fitstop can dictate that these funds be directed towards specific approved suppliers.
This requirement ensures that Fitstop can maintain brand consistency and quality in local marketing efforts. However, it also limits the franchisee's flexibility and could potentially increase their marketing costs if the approved suppliers' prices are not competitive. Franchisees are obligated to provide invoices or other proof of their monthly local advertising and marketing expenditures upon Fitstop's request.