Can Better Blend establish a purchasing cooperative and require franchisees to join?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.6 Market Cooperatives. BBF may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas.
If a Market Cooperative for the geographic area encompassing the Location has been established at the time Franchisee commences operations hereunder, Franchisee shall immediately become a member of such Market Cooperative.
If a Market Cooperative for the geographic area encompassing the Location is established during the term of this Agreement, Franchisee shall become a member of such Market Cooperative within 30 days of notice from BBF.
BBF shall not require Franchisee to be a member of more than one Market Cooperative.
If BBF establishes a Market Cooperative:
- (a) Governance.
Each Market Cooperative will be organized and governed in a form and manner, and shall commence operations on a date, determined by BBF.
BBF may require the Market Cooperative to adopt bylaws or regulations prepared by BBF.
Unless otherwise specified by BBF, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members.
BBF will be entitled to attend and participate in any meeting of a Market Cooperative.
Any Better Blend business owned by BBF in the Market Cooperative shall have the same voting rights as those owned by its franchisees.
Each Business owner will be entitled to cast one vote for each Business owned, provided, however, that a franchisee shall not be entitled to vote if it is in default under its franchise agreement.
If the members of a Market Cooperative are unable or fail to determine the manner in which Market Cooperative monies will be spent, BBF may assume this decision-making authority after 10 days' notice to the members of the Market Cooperative.
- (b) Purpose.
Each Market Cooperative shall be devoted exclusively to administering regional advertising and marketing programs and developing (subject to BBF's approval) standardized promotional materials for use by the members in local advertising and promotion.
- (c) Approval.
No advertising or promotional plans or materials may be used by a Market Cooperative or furnished to its members without the prior approval of BBF pursuant to
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Better Blend has the right to establish market advertising and promotional cooperative funds, referred to as "Market Cooperative", in specific geographic areas. If a Market Cooperative exists for the franchisee's location when they start operating, the franchisee must immediately become a member. If a Market Cooperative is established after the franchisee has commenced operations, the franchisee is required to join within 30 days of receiving notice from Better Blend. However, Better Blend will not require a franchisee to be a member of more than one Market Cooperative.
Better Blend determines the structure, governance, and start date of each Market Cooperative. Better Blend can also mandate that the Market Cooperative adopt bylaws or regulations they prepare. Unless Better Blend specifies otherwise, the activities of each Market Cooperative are decided by a majority vote of its members. Better Blend is allowed to attend and participate in any Market Cooperative meeting, and any Better Blend-owned business within the Market Cooperative area has the same voting rights as the franchisees.
Each Market Cooperative is dedicated to managing regional advertising and marketing programs and creating standardized promotional materials for its members, subject to Better Blend's approval. No advertising or promotional plans or materials can be used by the Market Cooperative or given to its members without Better Blend's prior approval. Better Blend also has the authority to designate the national or regional advertising agencies that the Market Cooperative uses. If the members of a Market Cooperative cannot decide how to spend the Market Cooperative's funds, Better Blend can take over the decision-making after giving the members 10 days' notice.