If Bhc establishes advertising cooperatives, must franchisees participate?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
We may establish advertising cooperatives comprised of groups of franchisees within regions or areas we designate and may modify boundaries of these groups in our discretion, effective on written notice.
You, your Affiliate Franchisee, and your Subfranchisees must participate in any advertising cooperative which encompasses your, your Affiliate Franchisee's, or your Subfranchisees' territory.
The members of each cooperative will adopt governing rules and voting procedures and determine procedures for assessing members; however, we have the right to attend any meetings and approve these rules and procedures and any amendments.
If any of our affiliates owns a BHC Restaurant within the boundaries of a cooperative, it will contribute to the cooperative at the lowest percentage contribution rate that any BHC franchisee in the same cooperative then pays and will have the same voting rights as franchisee members.
- (viii) We may require a cooperative to merge with another cooperative servicing an adjacent or proximate area, or to subdivide a cooperative into smaller groupings.
We may dissolve a cooperative when we simultaneously dissolve all advertising cooperatives.
For example, we may determine it is preferable to centralize all group advertising activities under the Marketing and Promotion Fee.
Advertising cooperatives must prepare quarterly and annual financial statements, which need not be audited, and make them available to all cooperative members and us.
We have no present plan to sell goods or services to any advertising cooperative.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, And Training (FDD pages 29–38)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees must participate in advertising cooperatives if Bhc establishes them. Bhc has the right to create advertising cooperatives for groups of franchisees within specific regions or areas, and Bhc can modify the boundaries of these groups with written notice.
If a franchisee's territory falls within the boundaries of an advertising cooperative, the franchisee is required to participate. The members of each cooperative will create governing rules, voting procedures, and assessment procedures. However, Bhc retains the right to attend meetings and approve these rules, procedures, and any changes made to them.
Bhc also has the authority to merge a cooperative with another in an adjacent area or divide a cooperative into smaller groups. Bhc may dissolve a cooperative only when all advertising cooperatives are dissolved simultaneously, potentially centralizing advertising activities under the Marketing and Promotion Fee. Advertising cooperatives are required to prepare quarterly and annual financial statements, which do not need to be audited, and make them available to all cooperative members and Bhc. Bhc currently has no plans to sell goods or services to any advertising cooperative.