Can Fly To Fit require franchisees to participate in a local or regional advertising cooperative?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
Local or Regional Advertising Cooperatives. We do not currently have any local or regional advertising cooperatives. We have the right to require you to participate in a local or regional advertising cooperative. We will define the area of the cooperative based on media markets, or other geographic criteria that we deem appropriate. Each franchisee in the area would have one vote per outlet (unless the franchisee is in default under its franchise agreement). The amount you must contribute to the cooperative will be determined by vote of the members, but not less than 1% and not more than 5% of gross sales. If our own outlets are members of a cooperative, they must contribute to the cooperative on the same basis as franchisees, and they will vote on the same basis as other members. We administer the cooperative, but we have the right to delegate responsibility for administration to an outside company such as an advertising agency or accounting firm, or to the franchisee members of the cooperative. We have the right to require the cooperative to operate from written bylaws or other governing documents that we determine. The documents are not currently available for you to review. Cooperatives will prepare annual financial statements which will be made available for review only by us and by the members of cooperative. We have the power to require cooperatives to be formed, changed, dissolved, or merged.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 23–30)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, Fly To Fit has the right to require franchisees to participate in a local or regional advertising cooperative. Fly To Fit will define the cooperative's area based on media markets or other geographic criteria they deem appropriate. Each franchisee in the area has one vote per outlet, unless they are in default of their franchise agreement.
The amount a franchisee must contribute to the cooperative will be determined by a vote of the members, but it will not be less than 1% and not more than 5% of gross sales. If Fly To Fit's own outlets are members of the cooperative, they must contribute on the same basis as franchisees and will vote on the same basis as other members.
Fly To Fit will administer the cooperative but has the right to delegate responsibility for administration to an outside company, such as an advertising agency or accounting firm, or to the franchisee members of the cooperative. Fly To Fit also has the right to require the cooperative to operate from written bylaws or other governing documents that they determine. These documents are not currently available for review. Cooperatives will prepare annual financial statements, which will be available for review only by Fly To Fit and the members of the cooperative. Fly To Fit has the power to require cooperatives to be formed, changed, dissolved, or merged.