If the Bang Cookies franchisor institutes an Advertising Cooperative that includes the franchisee's Designated Territory, what is the franchisee obligated to do?
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;
(5) Franchisee shall contribute to the Advertising Cooperative in the amounts as determined and required by the Advertising Cooperative or, otherwise in accordance with those documents governing the operation of the Advertising Cooperative; provided, however, Franchisee's contributions to the Advertising Cooperative shall not exceed Franchisee's local minimum marketing obligations set forth in Article 9.B. of this Agreement and Franchisee's contributions to the Advertising Cooperative shall count toward satisfaction of Franchisee's minimum local marketing obligations set forth in Article 9.B.;
(6) Franchisee shall submit to the Advertising Cooperative and to Franchisor such statements and reports as may be required by the Advertising Cooperative and approved by Franchisor.
All contributions to the Advertising Cooperative shall be maintained and administered in accordance with the documents governing the Advertising Cooperative.
The Advertising Cooperative shall be operated solely for the purpose of collection and expenditure of the Advertising Cooperative's fees for the purpose set forth in this Article 9.F.;
(7) No marketing materials, plans, or media may be used by the Advertising Cooperative or its members without the prior written approval of Franchisor;
(8) Shops owned by Franchisor and/or Franchisor's affiliates that are located within the geographic area of the designated Advertising Cooperative are not required to
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, if the franchisor institutes an Advertising Cooperative that includes a franchisee's Designated Territory or Shop location, the franchisee is obligated to participate in the cooperative. This participation includes making ongoing financial contributions as determined by the Advertising Cooperative. The cooperative can make decisions based on a simple majority vote, with a quorum of 25% of the franchisees within the cooperative's designated area.
The purpose of the Advertising Cooperative is to administer marketing programs and develop media for use by its members in local or regional marketing, all subject to the franchisor's review and approval. If an Advertising Cooperative already exists when the franchise agreement is executed, or if one is established during the term of the agreement, the franchisee must fully participate and execute all required documents to become a member.
The franchisee's contributions to the Advertising Cooperative will be in the amounts determined and required by the cooperative, but these contributions will not exceed the franchisee's minimum local marketing obligations as outlined in the franchise agreement. Furthermore, these contributions will count toward satisfying the franchisee's minimum local marketing obligations. The franchisee is also required to submit statements and reports to both the Advertising Cooperative and the franchisor as requested. No marketing materials, plans, or media can be used by the Advertising Cooperative or its members without the franchisor's prior written approval.
Shops owned by Bang Cookies or its affiliates within the Advertising Cooperative's geographic area are not required to participate. All funds collected by the Advertising Cooperative must be used solely for the cooperative's stated purpose. This structure ensures that franchisees contribute to marketing efforts in their region while maintaining franchisor oversight and control over marketing strategies and materials.