Under what condition can Floyds 99 purchase local advertising on behalf of a franchisee?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, upon 30 days written notice to you, create a regional advertising association ("Co-op") in the market area where you are located, at which time you must become a member of the Co-op. In our sole discretion, we may require that up to 2% of your Gross Sales that you
would normally spend as your Local Advertising Allocation be contributed instead into the Co-op. Other FLOYD'S 99 Shops in your region will be required to contribute on the same basis. If a Co-op is formed in your region, we anticipate that the typical contribution you must make to the Co-op will be up to 2% of your Gross Sales, contributed on a weekly basis or other recurring basis as the Co-op may determine, with our prior approval. If you are contractually bound by your lease or mall regulations to expend a required amount on advertising, the Co-op must factor this in when considering your dues and assessments to be paid to the Co-op. If we form a Co-op, you will be bound by the decisions of the majority of the members of the Co-op regarding expenditures, assessments and dues, to the extent we approve them. If you fail to participate in the Co-op or pay any Co-op dues, you breach the Franchise Agreement.
We must approve all advertising materials before they are used by a Co-op or furnished to its members. Each Co-op must prepare unaudited annual financial statements and send them to you if you request them. We have the right to determine the scope of the geographical areas included in each Co-op. We can form, change and dissolve the Co-op. Each Co-op will operate under a written document which franchisees can view. Either FFL or the Co-op may create the Co-op's advertising, but advertising created by the Co-op would be required to have our written approval before use.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 31–38)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, franchisees are primarily responsible for local advertising. However, Floyds 99 may create a regional advertising association, also known as a "Co-op", in the franchisee's market area after providing 30 days written notice. If a Co-op is formed, the franchisee is required to become a member.
If a Co-op is established, Floyds 99 has the discretion to require franchisees to contribute up to 2% of their Gross Sales, which would normally be allocated to local advertising, to the Co-op instead. Other Floyds 99 shops in the region will be required to contribute on the same basis. The Co-op then uses these funds for regional advertising efforts. The contribution is typically up to 2% of Gross Sales, contributed weekly or on another recurring basis as determined by the Co-op, with Floyds 99's prior approval.
Franchisees are bound by the decisions of the majority of Co-op members regarding expenditures, assessments, and dues, subject to Floyds 99's approval. Failure to participate in the Co-op or pay dues constitutes a breach of the Franchise Agreement. Floyds 99 must approve all advertising materials before they are used by the Co-op or furnished to its members. Floyds 99 also has the right to determine the geographical areas included in each Co-op and can form, change, and dissolve the Co-op.
If a franchisee is contractually obligated by their lease or mall regulations to spend a specific amount on advertising, the Co-op must consider this when determining the franchisee's dues and assessments. This ensures that franchisees can meet their existing advertising obligations while participating in the Co-op. This structure allows Floyds 99 to coordinate regional advertising efforts while still ensuring that local advertising needs are met.