Does Fly Fitness have the right to alter the structure of regional advertising cooperatives?
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, Fly Fitness retains significant control over regional advertising cooperatives, should they be established. The document states that Fly Fitness has the right to form, dissolve, merge, or change the structure of these cooperatives. This gives Fly Fitness considerable latitude in how regional advertising is managed.
Currently, Fly Fitness does not have any regional advertising funds or cooperatives. However, the FDD indicates that Fly Fitness may decide to establish one in the future, and franchisee participation could be mandatory at Fly Fitness's discretion. If a cooperative is established, each Fly Fitness outlet, whether affiliate-owned or franchisee-owned, will have one vote in the cooperative. Fly Fitness will determine in advance how each cooperative will be organized and governed.
For a prospective franchisee, this means that while there are no current regional advertising obligations, they could be imposed in the future. If a regional cooperative is created, the franchisee would be required to join and contribute financially, in addition to the Brand Fund contributions. However, contributions to a regional advertising fund or cooperative will be credited against the franchisee's required expenditures for local advertising. Franchisees should be aware that Fly Fitness maintains the right to modify or dissolve these cooperatives, which could impact regional advertising strategies and costs.