If Fly Fitness establishes a regional advertising fund or cooperative in the future, is franchisee participation mandatory?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
gional Advertising** (Franchise Agreement, Section 13.4)
Currently, our System has no regional advertising fund or cooperative. However, we may decide to establish a regional fund or cooperative in the future and your participation may be mandatory, in our sole discretion. A regional cooperative will be comprised of all Fly Fitness franchisees in a designated geographic area. Our affiliate-owned outlets may participate in a regional cooperative, in our sole discretion, if we have a Fly Fitness in the area. Each Fly Fitness outlet, whether affiliateowned or franchisee-owned, will have one vote in the cooperative. We will determine in advance how each cooperative will be organized and governed. We have the right to form, dissolve, merge or change the structure of the cooperatives. If a cooperative is established during the term of your Franchise Agreement, you must sign all documents we request and become a member of the cooperative according to the terms of the documents.
If we establish a regional advertising fund or cooperative, you must contribute amounts we require. Your contributions to a regional advertising fund or cooperative will be in addition to your required contributions to the Brand Fund; however, contributions made by you to a regional advertising fund or cooperative will be credited against your required expenditures for local advertising.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–29)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, currently, there is no regional advertising fund or cooperative. However, Fly Fitness may decide to establish one in the future, and if they do, franchisee participation may be mandatory at Fly Fitness's sole discretion. The regional cooperative would include all Fly Fitness franchisees within a specific geographic area. Fly Fitness's affiliate-owned outlets may also participate if there is a Fly Fitness in the area, with each outlet having one vote in the cooperative. Fly Fitness will determine the organization and governance of each cooperative and has the right to form, dissolve, merge, or change the structure of the cooperatives.
If a regional advertising fund or cooperative is established during the term of the Franchise Agreement, franchisees must sign all required documents and become a member according to the terms of those documents. Franchisees are required to contribute the amounts that Fly Fitness requires.
These contributions to a regional advertising fund or cooperative are in addition to the required contributions to the Brand Fund. However, contributions to the regional fund or cooperative will be credited against the franchisee's required expenditures for local advertising. This means that while franchisees must participate and contribute if a regional fund is established, they will receive a credit towards their local advertising obligations, potentially offsetting some of the financial burden.