Does Beggars Pizza have the discretion to determine if a Cooperative is applicable to a Restaurant?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
ecome a member of the Cooperative. If a Cooperative applicable to the Restaurant is established at any later time during the term of the Agreement, Franchisee must become a member of such Cooperative no later than thirty (30) days after the date on which the Cooperative commences operation. If the Restaurant is within the territory of more than one Cooperative, Franchisee will be required to be a member of only one Cooperative:
- 12.10.1 Each Cooperative will be organized and governed in a form and manner, will commence operation on a date approved by Franchisor, and will operate pursuant to written governing documents, all of which must be approved in advance by Franchisor in writing.
- 12.10.2 Each Cooperative will be organized for the exclusive purpose of administering regional advertising programs and developing, subject to Franchisor's approval, standardized advertising materials for use by the members in local advertising.
- 12.10.3 No promotional or advertising plans or materials may be used by a Cooperative or furnished to its members without the prior approval of Franchisor. All such plans and materials must be submitted to Franchisor in accordance with the procedure set forth in Section 12.7.
- 12.10.4 Each Cooperative may require its members to make contributions to the Cooperative in such amounts as determined by the Cooperative; provided, however, that Franchisee will not be required to contribute to any Cooperative in excess of two percent (2%) of Gross Sales during any calendar year, unless two-thirds of the members of the Cooperative vote in favor of a greater contribution. Franchisee's payments made under this Section 12.10.4 will be credited towards the expenditure required to be made under Section 12.2.
- 12.10.5 Each member franchisee will submit to the Cooperative the amount invoiced by the Cooperative or Franchisor, as described in Section 4.5, its contribution as provided in Section 12.10.4, together with such other statements or reports as may be required by Franchisor or by the Cooperative with Franchisor's prior approval.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Beggars Pizza Franchise Disclosure Document, Beggars Pizza has the authority to determine Cooperative membership. Specifically, if a Beggars Pizza restaurant is located within the territory of multiple Cooperatives, the franchisee is only required to be a member of one. Beggars Pizza retains the right to grant exemptions from Cooperative membership to any franchisee at its sole discretion.
Beggars Pizza also maintains control over the Cooperatives themselves. The franchisor must approve the form, manner of operation, and start date of each Cooperative. These organizations are intended for regional advertising programs and standardized advertising materials, all subject to Beggars Pizza's approval. This ensures that local advertising aligns with the overall brand standards and marketing strategies of Beggars Pizza.
Franchisees should note that while Cooperatives can set contribution amounts, these contributions are capped at 2% of Gross Sales annually, unless a supermajority (two-thirds) of the Cooperative members vote for a higher contribution. Payments made to the Cooperative count toward the franchisee's required advertising expenditure. Beggars Pizza also has the power to require franchisees to submit financial statements and reports to the Cooperative, further ensuring compliance and financial transparency within the advertising program.