For Bang Cookies, what is the condition for the franchisee's contributions to the Advertising Cooperative?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
, in Franchisor's Reasonable Business Judgment, possesses the right to authorize, establish, designate and de-authorize a local or regional advertising cooperative within those markets that
Franchisor designates (the "Advertising Cooperative"). Franchisee agrees that Franchisor possesses the sole and exclusive right to designate any geographic area in which two or more Shop franchises are located as a region for the purpose of establishing an Advertising Cooperative. If Franchisee's Shop or Designated Territory is located within the geographic area of an Advertising Cooperative, franchisee must participate in and contribute to the Advertising Cooperative. Franchisee agrees to the following:
- (1) If Franchisor previously instituted or, in the future, institutes an Advertising Cooperative that includes, in whole or in part, Franchisee's Designated Territory or Franchisee's Shop Location, Franchisee shall participate in and make such on-going financial contributions to the Advertising Cooperative, as determined by the Advertising Cooperative;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, if a franchisee's shop or designated territory is within the geographic area of an Advertising Cooperative, they must participate in and contribute to it. The amount of the contribution is determined and required by the Advertising Cooperative itself or by the documents governing its operation. However, the franchisee's contributions to the Advertising Cooperative cannot exceed their local minimum marketing obligations as outlined in Article 9.B of the Franchise Agreement. Furthermore, any contributions made to the Advertising Cooperative will count towards fulfilling the franchisee's minimum local marketing obligations.
Bang Cookies, in its reasonable business judgment, retains the right to authorize, establish, designate, and de-authorize local or regional advertising cooperatives in markets it designates. The franchisor also has the sole and exclusive right to designate any geographic area with two or more shop franchises as a region for establishing an Advertising Cooperative. Franchisees are required to participate in and contribute to the Advertising Cooperative if their shop or designated territory falls within the cooperative's geographic area.
This means that a Bang Cookies franchisee's marketing expenses could be partly determined by a regional cooperative. The franchisee is obligated to participate and make financial contributions as determined by the cooperative, provided that these contributions do not exceed the franchisee's local minimum marketing obligations. This setup allows for a balance between local marketing efforts and regional advertising strategies, with the franchisor maintaining oversight through approval of marketing materials and the right to establish and manage these cooperatives.