Can Fly Fitness require a franchisee to allocate their Local Advertising expenditures to an advertising cooperative?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ng agencies, the standards and specifications established by Franchisor, as modified from time to time, shall be final and binding upon Franchisee.
13.2. Local Advertising.
- 13.2.1. In addition to the ongoing advertising contributions set forth herein, and following the expenditures set forth in Section 13.2.3 below, Franchisee shall spend monthly, throughout the term of this Agreement, not less Five Hundred Dollars ($500) per month on advertising for the Franchised Business in the Territory ("Local Advertising"). Franchisor reserves the right to increase this minimum expenditure by ten percent (10%) per year in its sole discretion. Franchisor may require Franchisee to allocate to an advertising cooperative, as described in Section 13.4, some or all of Franchisee's required Local Advertising expenditures. Such allocation will be in partial or full satisfaction of Franchisee's obligations pursuant to this Section 13.2.1. Franchisor reserves the right to collect some or all of Franchisee's Local Advertising expenditure and implement Local Advertising on Franchisee's behalf.
- 13.2.2. Within ten (10) business days of Franchisor's request, Franchisee shall provide a quarterly expenditure report accurately reflecting Franchisee's Local Advertising expenditures for the preceding quarterly period.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness may require franchisees to allocate some or all of their local advertising expenditures to an advertising cooperative. The franchisee is obligated to spend a minimum of $500 per month on local advertising throughout the term of the agreement. Fly Fitness retains the right to increase this minimum expenditure by 10% per year at their discretion.
Fly Fitness can direct franchisees to allocate these local advertising funds to an advertising cooperative, which would satisfy the franchisee's local advertising obligations either partially or completely. Fly Fitness also has the option to collect some or all of the franchisee's local advertising expenditure and implement local advertising on the franchisee's behalf.
In addition to the monthly local advertising requirement, Fly Fitness franchisees must spend at least $15,000 on local advertising and promotional activities within the territory, starting 30 days before and extending up to 90 days after the franchise's opening. Fly Fitness also reserves the right to collect these grand opening funds and manage the grand opening campaign activities for the franchisee.