Who determines the geographical area covered by each Punch King Fitness Cooperative?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
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
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, the franchisor has the discretion to designate the geographical area for local or regional marketing and advertising cooperatives. Specifically, Punch King Fitness may designate any geographical area with at least two Punch King Fitness Franchised Businesses for establishing a Cooperative.
This means that Punch King Fitness retains control over the boundaries of these advertising cooperatives, which can impact how franchisees conduct local advertising and marketing. Franchisees are required to participate in a Cooperative if mandated by Punch King Fitness. If a Cooperative already exists in the franchisee's area when they open their business, they must immediately join it. Similarly, if a Cooperative is established during the term of the Franchise Agreement, the franchisee must become a member.
Each member of a Cooperative, including Punch King Fitness, its affiliates, and franchisees, gets one vote for each Franchised Business they operate within the Cooperative's designated geographical area. The cooperatives are organized and governed in a manner prescribed or approved by Punch King Fitness in writing, and operations commence on a date specified by Punch King Fitness. Franchisees should be aware that Punch King Fitness ultimately decides the structure, rules, and geographical scope of these advertising cooperatives, which could affect their marketing strategies and costs.