Is Kidokinetics required to establish a regional advertising and promotional cooperative?

ranchise Agreement for an additional Territory).

• 12.3. Regional Advertising and Promotional Cooperatives. Franchisor will have the right, in Franchisor's discretion, to designate any geographical area for purposes of establishing a regional advertising and promotional cooperative ("Cooperative"), and to determine whether a Cooperative is applicable to the Kidokinetics Business. If a Cooperative is established applicable to the Kidokinetics Business, Franchisee must participate in the Cooperative. Cooperative contributions will be credited towards the Local Marketing discussed in Section 12.2 above. Cooperative contributions will not exceed the Local Marketing Requirement unless a majority of the Cooperative votes to increase that requirement. The following provisions will apply to each Cooperative:
  • 12.3.1. Each Cooperative will be organized and governed in a form and manner, and will commence operation on a date, approved in advance by Franchisor;
  • 12.3.2. Each Cooperative will be organized for the exclusive purpose of administering regional advertising programs and developing, subject to Franchisor's approval, standardized advertising materials for use by the members in local advertising;
  • 12.3.3. No promotional or advertising plans or materials may be used by a Cooperative or furnished to its members without Franchisor's prior approval. All such plans and materials must be submitted to Franchisor for prior review and approval;
  • 12.3.4. The Cooperative's activities will be agreed upon by a majority vote of the member franchisees in the Cooperative. All Cooperative contributions will be credited against the Local Marketing Requirement. The Cooperative may, by the majority vote of its members, require a Cooperative contribution in excess of the Local Marketing requirement;

• 12.3.5. Each member franchisee must submit to the Cooperative, no later than Wednesday of each week, for the preceding business week, its respective contribution as provided in this Agreement together with such other statements or reports as Franchisor may require or as may be required by the Cooperative with Franchisor's approval; and
• 12.3.6. Franchisor may grant to Franchisee, in its sole discretion, an exemption for any length of time from the requirement of membership in a Cooperative, upon written request from Franchisee stating reasons supporting such exemption. Franchisor's decision concerning such request for exemption will be final.
• 12.4. Internet Advertising. At Franchisee's sole cost and expense, Franchisee must have paid advertising on the Internet, advertising Franchisee's Kidokinetics Business, including, but not limited to, Google, Yahoo, Bing and MSN.

Source: Item 22 — CONTRACTS (FDD page 59)