Will changes to the Beauty Bungalows System be applied equally to all franchisees?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.22 “System” means, collectively, Franchisor's valuable know-how, information, trade secrets, methods, Manuals, standards, designs, methods of trademark usage, copyrightable works, rental space sources and specifications, software, confidential electronic and other communications, methods of Internet usage, marketing programs, and research and development connected with the operation and promotion of the franchised Business, as modified by Franchisor at any time.
Franchisor reserves the right to include notations in any advertisement or marketing platform, including websites or mobile applications, that Franchises are available (or similar phrasing) along with contact forms or informational pages.
Franchisor may add, modify, or discontinue any Marks to be used under the System.
9.05 Marketing Cooperatives. Franchisor may designate a geographic area in which two or more Beauty Bungalows are located as an area in which to establish a marketing cooperative ("Marketing Cooperative"). If a Marketing Cooperative exists, or Franchisor establishes a Marketing Cooperative, in a geographic area encompassing Franchisee's Franchise, Franchisee must join such Marketing Cooperative. The Marketing Cooperative's members will include all Beauty Bungalows operating in the geographic area, including any Beauty Bungalows operated by Franchisor or Franchisee's affiliates, if applicable. Franchisor will determine how any Marketing Cooperative is organized and governed, but the Marketing Cooperative's members are responsible for its administration and determination of contribution levels (up to but not exceeding two percent (2%) of monthly Gross Revenue). Any contributions Franchisee makes to a required Marketing Cooperative will also count toward the Local Area Marketing Requirement. Each Marketing Cooperative will operate under written governing documents prepared by Franchisor or Franchisor's designee. Such documentation will be made available to members of the Marketing Cooperative upon reasonable request. All material decisions of the Marketing Cooperative, including contribution levels, will require the affirmative vote of at least 51% of all Beauty Bungalows operating within the Marketing Cooperative's area (including those that operated by Franchisor or Franchisor's affiliate, if any), with each Beauty Bungalows Salon Studio receiving one vote. Franchisor may collect Marketing Cooperative fees and transfer those fees to the Marketing Cooperative, or the Marketing Cooperative may collect the fees directly, as Franchisor determines. Any fees that Franchisee pays to a Marketing Cooperative will count towards Franchisee's minimum local advertising obligation under Section 9.01. The fees imposed by the Marketing Cooperative may exceed Franchisee's required minimum local advertising obligation under Section 9.01. Franchisor may form, modify, change, dissolve, or merge Marketing Cooperatives.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to the 2025 Beauty Bungalows FDD, changes to the Beauty Bungalows System can be implemented by the franchisor. The "System" is defined as the franchisor's know-how, information, trade secrets, methods, manuals, standards, designs, methods of trademark usage, copyrightable works, rental space sources and specifications, software, confidential electronic and other communications, methods of Internet usage, marketing programs, and research and development connected with the operation and promotion of the franchised Business, as modified by Franchisor at any time."
Beauty Bungalows retains the right to modify the System at any time, implying that changes will be applied across the board. One specific example of a change that could affect franchisees is related to marketing cooperatives. Beauty Bungalows may designate geographic areas for marketing cooperatives, and if a franchisee's location falls within such an area, they must join. While the members of the cooperative determine contribution levels, Beauty Bungalows determines how the cooperative is organized and governed and can form, modify, change, dissolve, or merge Marketing Cooperatives.
Furthermore, Beauty Bungalows has the right to modify or discontinue any marks used under the System. This means franchisees may be required to adopt new branding or discontinue using existing marks. The franchisor also reserves the right to include notations in any advertisement or marketing platform, including websites or mobile applications, that Franchises are available along with contact forms or informational pages. These clauses suggest that changes to the Beauty Bungalows System are generally applied system-wide, although the impact and implementation may vary depending on the specific change.