Is Angry Chickz obligated to establish regions for co-operative advertising?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.7 Co-op Advertising.
Company may, but is not obligated to, establish regions for co-operative advertising ("Co-op Advertising Regions"), to coordinate advertising, marketing efforts and programs and maximize the use of local and/or regional advertising media.
- 8.7.1 If Company creates a Co-op Advertising Region for the region in which the Franchised Business is located, Franchisee shall become a subscriber and member of the Co-op Advertising Region.
Franchisee will execute and participate in accordance with the organizational and formation documents prescribed by Company for the Co-op Advertising Region.
The size and membership of such regions shall be binding upon Franchisee, and all other similarly situated franchisees of the System and Company or such Affiliate of Company, if it operates Restaurant(s) in the region; provided, however, that Company reserves the right to exempt itself, its Affiliates and/or certain franchisees from participation, including in connection with Restaurants at Non-Traditional Venues in the region.
At all meetings of Co-op Advertising Region each participating member shall be entitled to one vote for each Restaurant located within the Co-op Advertising Region or such other vote as may reasonably be determined by Company.
- 8.7.2 Franchisee and other members of the Co-op Advertising Region, whose agreements require their participation, will contribute to the Co-op Advertising Region such minimum amount as may be determined by Company, but such minimum amount designated by Company but is not expected to exceed 1%
of Gross Sales (the "Co-op Minimum"); provided however, the rate of contribution may be changed from time to time upon the affirmative vote or consent of at least a majority of the voting power of the Co-op Advertising Region, but the Co-op Advertising Region may not reduce the contribution rate below any minimum established by Company. Contributions to the Co-op Advertising Region shall be in addition to the Local Advertising Expenditure.
- 8.7.3 Each Co-op Advertising Region will decide the use of funds available to it for advertising or marketing. The Co-op Advertising Region shall then in writing request approval from Company. Company shall not withhold its approval unreasonably, but no placement of advertising or commitment of funds on behalf of a Co-op Advertising Region will be made without Company's prior written approval. Company reserves the right to establish standards concerning the operation of the Co-op Advertising Region, advertising agencies retained by Co-op Advertising Region, and advertising programs conducted by Co-op Advertising Region. Any disputes (other than pricing) arising among or between Franchisee, other franchisees, and/or the Co-op Advertising Region may be resolved by Company whose decision shall be final and binding on all parties. No Co-op Advertising Region may appoint or pay from the funds collected by the Co-op Advertising Region fees or costs of any advertising agency or buying group without the prior written consent of Company.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, Angry Chickz is not required to establish regions for co-operative advertising. The FDD states that Angry Chickz may, but is not obligated to, establish these regions, referred to as "Co-op Advertising Regions," to better coordinate advertising and marketing efforts. This gives Angry Chickz the flexibility to decide whether or not such regional advertising cooperatives are beneficial to the franchise system.
If Angry Chickz does establish a Co-op Advertising Region where a franchisee's restaurant is located, the franchisee is required to become a member and participate in that region. The franchisee must adhere to the organizational documents prescribed by Angry Chickz for the Co-op Advertising Region. The size and membership of these regions are binding on the franchisee and other similarly situated franchisees, as well as Angry Chickz itself if it operates restaurants in the region. However, Angry Chickz retains the right to exempt itself, its affiliates, and/or certain franchisees, such as those in non-traditional venues, from participating.
Franchisees who are members of a Co-op Advertising Region must contribute a minimum amount determined by Angry Chickz, which is not expected to exceed 1% of gross sales. However, the contribution rate can be changed with the approval of a majority vote within the Co-op Advertising Region, but it cannot be reduced below any minimum set by Angry Chickz. These contributions are in addition to the franchisee's required local advertising expenditure. Each Co-op Advertising Region decides how to use its funds for advertising and marketing, but Angry Chickz's prior written approval is required before any advertising placement or commitment of funds is made. Angry Chickz also reserves the right to set standards for the operation of the Co-op Advertising Region, the advertising agencies it retains, and the advertising programs it conducts.