May Itan establish regional advertising cooperatives?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, but need not, establish regional advertising cooperatives for purposes of pooling advertising funds to be used in discrete regions. We will determine the boundaries of the cooperative. In most instances, the boundaries will coincide with zip codes, designated marketing areas or municipal boundaries. We will specify the manner in which the cooperative is organized and governed. We may choose between: (a) administering the cooperative ourselves; or (b) establishing an advertising council, comprised by the cooperative's members, to administer the cooperative. We may require that the cooperative be administered in accordance with written bylaws, organizational documents or other governing documents that we approve.
If your Store is located within a region subject to an advertising cooperative you must: (a) participate in the cooperative according to its rules and procedures and abide by its decisions; and (b) pay a cooperative advertising fee. We may set the minimum cooperative advertising fee or we may allow the cooperative to set the fee based on majority vote of its members. In either case, the cooperative advertising fee will not exceed the amount of your Local Marketing Commitment. All cooperative advertising fees you pay are credited against your Local Marketing Commitment. Any company-owned Store located in the cooperative will contribute on the same basis as franchisees.
Advertising cooperatives are not required to prepare annual or periodic financial statements. Any financial statements that are prepared will be made available to you upon request. We reserve the right to form, change, merge or terminate advertising cooperatives at any time. There were no advertising cooperatives in effect as of December 31, 2024.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–31)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan may establish regional advertising cooperatives, but is not required to do so. Itan will determine the boundaries of the cooperative, which will often coincide with zip codes, designated marketing areas, or municipal boundaries. Itan will also specify how the cooperative is organized and governed, choosing between administering it themselves or establishing an advertising council comprised of the cooperative's members. Itan may also require the cooperative to be administered according to written bylaws or other governing documents that Itan approves.
If a franchisee's Itan store is located within a region subject to an advertising cooperative, the franchisee must participate in the cooperative according to its rules and procedures, abide by its decisions, and pay a cooperative advertising fee. Itan may set the minimum cooperative advertising fee, or allow the cooperative to set the fee based on a majority vote of its members. The cooperative advertising fee will not exceed the amount of the franchisee's Local Marketing Commitment, and all cooperative advertising fees paid are credited against this commitment. Any company-owned Itan store located in the cooperative will contribute on the same basis as franchisees.
Itan's FDD states that advertising cooperatives are not required to prepare annual or periodic financial statements, but any financial statements that are prepared will be made available to franchisees upon request. Itan reserves the right to form, change, merge, or terminate advertising cooperatives at any time. As of December 31, 2024, there were no advertising cooperatives in effect. This gives Itan significant flexibility in how advertising is managed and funded at the regional level, but also places requirements on franchisees to participate and contribute financially if a cooperative is established in their area.