Does the Pump It Up franchisor have voting rights in the Regional Co-op Fund?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, in our sole discretion, establish a regional advertising cooperative ("Regional Co-op Fund") in any Designated Market Area ("DMA"). As of the date of this disclosure document, we do not
have any Regional Co-op Funds. If established, the Regional Co-op Fund shall be organized and governed in a form and manner and shall commence operations on a specified date, approved in advance by us in writing. We may choose to prepare bylaws to be used by the Regional Co-op Fund and may require the Regional Co-op Fund to incorporate. Once a Regional Co-op Fund is established in a DMA in which your Franchised Business is located, you shall automatically become a member of such Regional Co-op Fund upon commencement of operation of the Franchised Business if the Regional Co-op Fund is in existence at that time, or no later than 30 days after the date on which the Regional Co-op Fund commences operation. In no event shall you be required to be a member of more than one Regional Co-op Fund with respect to the Franchised Business. If a Regional Co-op Fund has been established in your DMA, you shall contribute the amount established, from time to time, by the Regional Co-op Fund for its members ("Co-op Contribution"). You shall submit your Co-op Contribution to the Regional Co-op Fund monthly, together with such statements or reports as may be required by us (or by the Regional Co-op Fund with our prior written approval). Monies in the Regional Co-op Fund may be spent for the purposes determined by a majority vote of the Regional Co-op Fund. We shall be a member of any Regional Co-op Fund and be entitled to attend and fully participate in Regional Co-op Fund meetings; however, we shall not have a vote unless we or our affiliates operate a Pump It Up Business in the area covered by the Regional Co-op Fund. Pump It Up Businesses operated by us and our affiliates in the area covered by the Regional Co-op Fund also will contribute to the Regional Co-op Fund on the same basis as comparable franchisees.
Source: Item 11 — FRANCHISORS'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 30–41)
What This Means (2025 FDD)
According to the 2025 Pump It Up FDD, the franchisor may establish a regional advertising cooperative (Regional Co-op Fund) in any Designated Market Area (DMA). Franchisees automatically become members of the Regional Co-op Fund if one is established in their DMA. Franchisees contribute to this fund, with the amount determined by the Regional Co-op Fund members.
The funds can be used for purposes determined by a majority vote of the Regional Co-op Fund. Pump It Up is a member of any Regional Co-op Fund and can attend and participate in meetings. However, Pump It Up does not have a vote unless they or their affiliates operate a Pump It Up Business in the area covered by the Regional Co-op Fund.
This means that if Pump It Up or its affiliates operate a Pump It Up Business in the same area as a franchisee's business and covered by the Regional Co-op Fund, Pump It Up will have voting rights in that fund. This could influence decisions about how the co-op funds are spent in that region. Pump It Up Businesses operated by the franchisor and its affiliates will contribute to the Regional Co-op Fund on the same basis as comparable franchisees.