If a franchisee of The Standardx chooses to participate in a Cooperative advertising program, what obligations does the franchisee have?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
5.5 Cooperative Advertising Programs. Hyatt may identify a region in which two (2) or more Brand Hotels are located in order to establish a local or regional advertising cooperative (a "Cooperative"). Hyatt may form, change, dissolve and merge Cooperatives. The Cooperative's purpose will be to collect funds from its members and to plan, discuss, organize, develop, utilize, produce, disseminate, and implement marketing, advertising and promotional programs and materials on a collective basis (and to cover related expenses) for participating Brand Hotels. Hyatt will not require Franchisee to participate in a Cooperative. However, if Franchisee chooses to participate in the Cooperative, Franchisee must do so according to the Cooperative's rules, including paying the Hotel's allocable share of any advertising, marketing, promotional and other programs that the Cooperative conducts. All restrictions under this Agreement relating to any advertising, marketing or promotional programs that Franchisee conducts also apply to any such programs that the Cooperative conducts.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, participation in a Cooperative advertising program is not mandatory. However, if a franchisee chooses to participate, they must adhere to the Cooperative's rules. This includes paying the hotel's allocated share of advertising, marketing, promotional, and other program costs managed by the Cooperative.
This means that franchisees who opt into a Cooperative must budget for these ongoing advertising and marketing expenses. The amount will depend on the hotel's allocable share, which is determined by the Cooperative. Franchisees need to factor in these costs when evaluating the potential benefits of joining a Cooperative, as these programs aim to boost local or regional brand awareness and drive business to participating hotels.
All restrictions under the franchise agreement that apply to the franchisee's own advertising, marketing, or promotional programs also extend to any programs conducted by the Cooperative. This ensures that all marketing efforts, whether individual or collective, maintain brand standards and comply with the franchisor's guidelines. Therefore, franchisees should carefully review the Cooperative's rules and planned activities to ensure compliance with the overall franchise agreement.