Is participation in a local advertising cooperative mandatory for Hck Hot Chicken franchisees?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
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 must contribute up to 2% of their monthly gross sales from each restaurant within the cooperative's area. Hck Hot Chicken restaurants within the same area will contribute on the same basis as franchisees.
This means that if Hck Hot Chicken establishes a local advertising cooperative in a franchisee's area, participation is not optional. The franchisee will be obligated to contribute up to 2% of their monthly gross sales to the cooperative. The funds will be used for local and regional advertising efforts as determined by the cooperative members.
It is important for prospective franchisees to understand that this advertising expense is in addition to the Brand Fund contributions and the local advertising requirement of 1% of annual gross sales. Franchisees should inquire about the likelihood of local advertising cooperatives being formed in their target market and factor this potential expense into their financial projections. Understanding the structure and governance of these cooperatives is also crucial to ensure that advertising funds are used effectively to benefit all members.