Under what condition can Hydrodog cooperative contributions exceed the local advertising expenditure?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right, in our discretion, to designate any geographic area for purposes of establishing a regional advertising and promotional cooperative ("Cooperative"). All franchisees in the designated geographical area must participate in the Cooperative. Cooperative contributions will be credited towards your Local Advertising expenditure, and will not exceed the Local Advertising expenditure unless a majority of the Cooperative's members vote to spend an amount greater than the Local Advertising expenditure on advertising. Each Cooperative will be organized for the exclusive purpose of administering regional advertising programs and developing, subject to our approval, standardized advertising materials for use by the members in local advertising. Each Cooperative must operate from written governing documents which will be made available to franchisees. Each year, every operating cooperative will prepare financial statements which will be made available to franchisees. No promotional or advertising plans or materials may be used by a Cooperative or furnished to its members without our prior approval. All such plans and materials will be submitted to us in accordance with the procedure set forth in Article 12.5 of the Franchise Agreement. We may grant to any franchisee, in our sole discretion, an exemption for any length of time from the requirement of membership in a Cooperative, upon written request of such franchisee stating reasons supporting such exemption. Our decision concerning such request for exemption will be final. We reserve the right to form, change, dissolve, or merge any Cooperative. (Franchise Agreement, Section 12.8)
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–30)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, franchisees may be required to participate in a regional advertising cooperative. The standard cooperative contributions are credited toward the franchisee's local advertising expenditure. However, Hydrodog franchisees in a designated geographic area may, by majority vote, choose to spend more than the local advertising expenditure on advertising. In this case, the cooperative contributions will exceed the local advertising expenditure.
This means that while Hydrodog sets a standard for local advertising spending, franchisees within a cooperative have the power to collectively decide to increase their advertising investment. This flexibility allows franchisees to respond to local market conditions and opportunities, potentially boosting brand awareness and sales in their region.
However, it's important to note that all advertising plans and materials used by the cooperative must be approved by Hydrodog. This ensures that the cooperative's advertising efforts align with the overall brand standards and marketing strategy of Hydrodog. Franchisees should carefully consider the potential benefits and costs of participating in a cooperative before agreeing to a higher advertising expenditure.