For Bang Cookies, what happens if an Advertising Cooperative is established during the term of the agreement that includes the franchisee's Shop location or Designated Territory?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
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;
(2) Franchisor may establish foundational and organizational requirements of the Advertising Cooperative including voting provisions that allows the Advertising Cooperative to make decisions based on the simple majority vote (1 vote per franchisee Shop located within the designated area of the Advertising Cooperative) with a quorum constituting 25% of those franchisees within the Advertising Cooperative;
(3) Unless otherwise authorized and approved by Franchisor in writing, each Advertising Cooperative shall be organized for the exclusive purpose of administering marketing programs and the development of media (all subject to the review and approval of Franchisor) for use by members of the Advertising Cooperative in local or regional marketing;
(4) If at the time of execution of this Agreement an Advertising Cooperative has been established for a geographic area that includes, in whole or in part, Franchisee's Shop location or Designated Territory, or if such Advertising Cooperative is established during the Term of this Agreement, Franchisee shall fully participate in the Advertising Cooperative and Franchisee shall execute, at the request of Franchisor, all documents required by Franchisor and Franchisee shall become a member of the Advertising Cooperative subject to the terms of those documents;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, if an Advertising Cooperative is established during the term of the agreement that includes a franchisee's Shop location or Designated Territory, the franchisee is obligated to participate in and contribute to the Advertising Cooperative. This means the franchisee must become a member and adhere to the cooperative's rules and guidelines. The franchisee is also required to make ongoing financial contributions as determined by the Advertising Cooperative.
Bang Cookies retains the right to authorize, establish, designate, and de-authorize local or regional advertising cooperatives within designated markets. The franchisor has the exclusive right to designate any geographic area with two or more Shop franchises as a region for establishing an Advertising Cooperative. The cooperative's decisions are made by a simple majority vote, with one vote per franchisee Shop, and a quorum of 25% of the franchisees within the Advertising Cooperative is required.
The Advertising Cooperative's primary purpose is to administer marketing programs and develop media for use by its members in local or regional marketing efforts. All marketing programs and media development are subject to review and approval by Bang Cookies. Franchisees must also execute all documents required by Bang Cookies to become a member of the Advertising Cooperative.
This requirement ensures that all franchisees within a specific geographic area contribute to and participate in coordinated marketing efforts. This can help to increase brand awareness and drive sales for all franchisees in the cooperative. However, it also means that franchisees will have to allocate a portion of their revenue to the Advertising Cooperative and may have limited control over how those funds are spent.