Under what conditions is a Beggars Pizza franchisee required to become a member of a Cooperative?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
We may designate any geographical area for purposes of establishing a regional advertising and promotional cooperative (a "Cooperative") in our discretion and determine whether a Cooperative is applicable to the Restaurant. If a Cooperative has been established in your area before you open the Restaurant, you must become a member of the Cooperative no later than 30 days after opening the Restaurant. If a Cooperative is established after you open the Restaurant, you must become a member of the Cooperative no later than 30 days after the date on which the Cooperative begins operation. If the Restaurant is within the territory of more than one Cooperative, you will not be required to be a member of more than one Cooperative within that territory. (Franchise Agreement, Section 12.10.)
Each Cooperative will be organized for the exclusive purpose of administering local and/or regional advertising programs and developing standardized advertising materials for use by the members in local advertising subject to our approval. No promotional or advertising plans or materials may be used by a Cooperative or furnished to its members without our approval. Each Cooperative may require its members to make contributions to the Cooperative in an amount determined by the Cooperative up to a maximum of 2% of Gross Sales during any calendar year, unless two-thirds of the members of the Cooperative vote in favor of a greater contribution. Any payments you make to the Cooperative will be credited towards your required local advertising expenditure.
We will have the power to require any Cooperative to be formed, changed, dissolved, or merged.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 19–26)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, franchisees may be required to join an advertising cooperative. If a cooperative is already established in the franchisee's area before they open their restaurant, they must become a member within 30 days of opening. If a cooperative is established after the restaurant opens, the franchisee must join within 30 days of the cooperative's start date.
The purpose of these cooperatives is to manage local and regional advertising programs and create standardized advertising materials, subject to Beggars Pizza's approval. The franchisor retains the power to form, change, dissolve, or merge any cooperative. Franchisees are only required to be a member of one cooperative, even if their restaurant falls within the territory of multiple cooperatives.
Cooperatives can require members to contribute up to 2% of their gross sales annually, although a two-thirds vote of the members can approve a higher contribution. Any payments made to the cooperative will be credited toward the franchisee's required local advertising expenditure. This structure ensures that franchisees participate in local advertising efforts while maintaining some control over the cooperative's budget through member voting.