Can Fitstop require a franchisee to expend additional funds on promotional activities beyond the Initial Marketing Spend?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
tion 6: Marketing/Advertising and Technology**
©2024 Fitstop USA, Inc. 6.1 Marketing, Advertising and Promotion Generally. We may develop general marketing, advertising or promotional activities or campaigns for all franchises in the network including the Franchise. You must comply with the terms of and actively participate in all sales, marketing, or promotional
campaigns, programs or activities conducted, or reasonably required, by us. You will have access to marketing, promotional, and presentation material including template emails, scripts, presentation packs via the online system and Manual(s). You shall fully cooperate with us in connection with, and participate in, all of our market research programs. We will pay the costs of such campaigns, programs, and activities using the Marketing Fees paid by you and other franchisees but we reserve the right to request additional payments from you and other franchisees upon reasonable demand.
6.2 Use of Prescribed Materials. You must display on or about the premises only those signs, posters, and other advertising material we approve. You must maintain all signs, posters and other advertising material in a clean and satisfactory condition and good state of repair. Without prejudice to any other remedy available, we may, through our employees and agents, remove from the premises any printed matter, signs, posters, or other advertising material which we have not approved or which is not in a clean or satisfactory condition and state of repair.
6.3 Initial Marketing Spend; Other Initial Marketing/Promotional Efforts.
- 6.3.1 Initial Marketing Spend. You are required to spend a minimum of $10,000 in various online and/or other marketing activities that we prescribe as part of our System and that we expect will be paid to our Approved Supplier (the "Initial Marketing Spend"). Typically, we expect that you will be required to expend these amounts 30 to 90 days prior to opening and continuing through the grand opening of your Franchised Business – as we discuss and specify prior to any opening or operation of your Franchised Business in the Manual(s) or otherwise in writing. We may require that you expend any portion of the Initial Marketing Spend on materials/services that are purchased from our Approved Supplier(s).
- 6.3.2 Other Initial Marketing/Promotional Efforts. We strongly recommend, and may require, that you expend up to an additional $10,000 on other promotional activities designed to increase the visibility of your Franchised Business within the Designated Territory prior to or around the time of your contemplated or required opening. We may provide further directives to you via the Manuals or otherwise in writing on how we suggest or, in some cases, require our System franchisees to expend these funds.
6.4 Local Marketing and Local Marketing Requirement (or "LMR").
- 6.4.1 You must market and promote the Franchised Business at your cost, including using your best endeavors to actively promote the Franchise and in particular must regularly canvass members and potential members and follow up any leads you receive or that we may provide.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees may be required to expend additional funds on promotional activities beyond the initial marketing spend. Fitstop may develop general marketing, advertising, or promotional activities for all franchises, and franchisees must comply with and actively participate in these campaigns. While Fitstop will cover the costs of these activities using the Marketing Fees paid by franchisees, they reserve the right to request additional payments from franchisees upon reasonable demand.
Fitstop requires franchisees to spend a minimum of $10,000 on online or other marketing activities as part of the Initial Marketing Spend, typically 30 to 90 days before opening. Fitstop also strongly recommends, and may require, that franchisees expend up to an additional $10,000 on other promotional activities to increase visibility within their Designated Territory prior to or around the time of opening.
In addition to the Initial Marketing Spend, Fitstop franchisees must expend a minimum amount equal to 1% of the Gross Revenue generated by the Franchised Business during the preceding calendar month on local marketing. Fitstop may require that all or some portion of the Local Marketing Requirement be expended on services/collateral that franchisees must acquire from one or more of Fitstop's then-current Approved Suppliers. This ongoing local marketing requirement ensures continuous promotion of the Fitstop location.
Fitstop also has established a brand development fund, where franchisees are required to contribute two percent (2%) of their gross revenue. Fitstop may use the fund for activities they determine appropriate to promote, market, advertise and/or otherwise develop the System, Proprietary Marks, System Business locations, Approved Services/Products and/or our brand generally.