Can a Hck Hot Chicken franchisee be required to participate in a local advertising cooperative?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
thods, techniques, processes and data used in connection with, displayed on, or collected from or through Franchisor's web site(s); and (v) all intellectual property rights in or to any of the foregoing.
- 8.6 Local Advertising Cooperative. Franchisee may be required to participate in any local or regional advertising cooperative for HCK Hot Chicken Restaurants that are established. The area of each local and regional advertising cooperative will be defined by Franchisor, based on Franchisor's assessment of the area. Franchisees in each cooperative will contribute an amount to the cooperative of up to two percent (2%) of monthly Gross Sales for each Restaurant that the franchisee owns that exists within the cooperative's area. Each Restaurant that Franchisor owns that exists within the cooperative's area will contribute to the cooperative on the same basis as franchisees. Members of the cooperative will be responsible for administering the cooperative, including determining the amount of contributions from each member. Franchisor may require that each cooperative operate with governing documents and prepare annual unaudited financial statements. Franchisor reserves the right to form, change, dissolve or merge any advertising cooperative formed in the future.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, franchisees may be required to participate in local or regional advertising cooperatives if they are established. The area covered by each cooperative will be determined by Hck Hot Chicken. Franchisees within a cooperative may be required to contribute up to two percent (2%) of their monthly Gross Sales to the cooperative for each restaurant they own within the cooperative's area. Hck Hot Chicken restaurants within the cooperative area will contribute on the same basis as franchisees.
This means that as a Hck Hot Chicken franchisee, you might be obligated to contribute a portion of your sales to a local advertising fund. The specific amount, up to 2% of monthly gross sales, and the geographic scope of the cooperative will be determined by Hck Hot Chicken. This contribution is in addition to any Brand Fund contributions required by the franchise agreement.
It is important to note that Hck Hot Chicken also reserves the right to form, change, dissolve, or merge any advertising cooperative in the future. This gives Hck Hot Chicken significant control over the advertising strategy and the financial obligations of its franchisees in relation to local advertising efforts. Franchisees should factor this potential advertising expense into their financial projections and understand the terms and conditions of any advertising cooperative they may be required to join.
Furthermore, any contributions made to the cooperative may be applied towards the Local Advertising Requirement, which is one percent (1%) of annual Gross Sales. If a franchisee fails to spend the Local Advertising Requirement, they will be required to pay the difference to Hck Hot Chicken, or if established, the Brand Fund.