Who determines the amount of the Cooperative Contribution for a Punch King Fitness franchisee?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
d that Franchisee spends at least $100 per month every month for Local Advertising to generate public interest and awareness of the Franchised Business and to adequately penetrate the market for Franchisee's products and services within Franchisee's trading area. Franchisee shall submit proof of local advertising spending to franchisor by the 10th day following the end of each fiscal quarter.
J. Regional Advertising Cooperatives
Franchisor may, at its discretion, designate any geographical area in which at least two Punch King Fitness Franchised Businesses are located for the purpose of establishing a local or regional marketing and advertising cooperative (Cooperative). Franchisee shall take appropriate steps to establish and participate in a Cooperative if required to do so by Franchisor. If a Cooperative for the geographical area in which the Franchised Business is located has already been established when Franchisee opens the Franchised Business, then Franchisee shall immediately become a member of the Cooperative under the terms of its governing documents. If a Cooperative for the geographical area in which the Franchised Business is located is established during the term of this Agreement, Franchisee shall immediately become a member of the Cooperative and take all steps necessary to become a member. In no event shall Franchisee be required to be a member of more than one Cooperative for the Franchised Business established under this Agreement. The following provisions apply to each Cooperative:
1. Each Cooperative will be organized and governed in a form and manner prescribed or approved by Franchisor in writing and will commence operations on a date specified by Franchisor. Any disputes arising between Franchisee on one side and other franchisees in the Cooperative or the Cooperative on the other side, will be resolved in accordance with the rules and procedures in the Cooperative's governing documents. Each member of a Cooperative, whether a Franchisor, an affiliate of Franchisor, or a
franchisee of Franchisor, will be entitled to one vote for each Franchised Business operated by the member in the geographical area for which the Cooperative is established.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, the amount of the Cooperative Contribution is determined by the franchisor. Specifically, Punch King Fitness may designate geographical areas for local or regional marketing and advertising cooperatives (Cooperatives) if at least two Punch King Fitness Franchised Businesses are located there. Franchisees are required to participate in a Cooperative if mandated by Punch King Fitness.
The FDD states that each Cooperative will be organized and governed in a form and manner prescribed or approved by Punch King Fitness in writing and will commence operations on a date specified by Punch King Fitness. This indicates that Punch King Fitness has significant control over the structure and operation of these cooperatives. Disputes among franchisees or between a franchisee and the Cooperative will be resolved according to the Cooperative's governing documents.
For each Punch King Fitness Franchised Business operated by the franchisor or its affiliates in a Cooperative's geographical area, Punch King Fitness will make a Cooperative Contribution on the same basis as required from comparable franchisees within that Cooperative. This ensures that the franchisor contributes proportionally to the advertising efforts, aligning its interests with those of the franchisees in the Cooperative. Each member of a Cooperative, whether a franchisor, an affiliate of the franchisor, or a franchisee, gets one vote for each Franchised Business they operate in the Cooperative's area.