What is a 'Market Cooperative' as defined by Bombs Away Franchising?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Bombs Away Franchising will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of Bombs Away Franchising's fiscal year and will provide the financial statement to Franchisee upon request.
- 9.4 Market Cooperatives. Bombs Away Franchising may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative for the geographic area encompassing the Territory 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 Territory is established during the term of this Agreement, Franchisee shall become a member of such Market Cooperative within 30 days. Bombs Away Franchising shall not require Franchisee to be a member of more than one Market Cooperative. If Bombs Away Franchising 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 Bombs Away Franchising. Bombs Away Franchising may require the Market Cooperative to adopt bylaws or regulations prepared by Bombs Away Franchising. Unless otherwise specified by Bombs Away Franchising, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members. Bombs Away Franchising will be entitled to attend and participate in any meeting of a Market Cooperative. Any Bombs Away business owned by Bombs Away Franchising 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, Bombs Away Franchising 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 Bombs Away Franchising'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 Bombs Away Franchising pursuant to Section 9.1. Bombs Away Franchising may designate the national or regional advertising agencies used by the Market Cooperative.
- (d) Funding. The majority vote of the Market Cooperative will determine the dues to be paid by members of the Market Cooperative, including Franchisee, but not less than 1% and not more than 5% of Gross Sales.
- (e) Enforcement. Only Bombs Away Franchising will have the right to enforce the obligations of franchisees who are members of a Market Cooperative to contribute to the Market Cooperative.
- (f) Termination. Bombs Away Franchising may terminate any Market Cooperative. Any funds left in a Market Cooperative upon termination will be transferred to the Marketing Fund.
- 9.5 Required Spending. Franchisee shall spend at least 5% of Gross Sales each month on marketing the Business. Upon request of Bombs Away Franchising, Franchisee shall furnish proof of its compliance with this Section. Bombs Away Franchising has the sole discretion to determine what activities constitute "marketing" under this Section. Bombs Away Franchising may, in its discretion, determine that if Franchisee contributes to a Market Cooperative, the amount of the contribution will be counted towards Franchisee's required spending under this Section.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, a Market Cooperative is defined as a market advertising and promotional cooperative fund that Bombs Away Franchising may establish in any geographical area. If a Market Cooperative exists in the franchisee's territory when they start operating, they must immediately become a member. If one is established later, the franchisee has 30 days to join. Bombs Away will not require a franchisee to be part of more than one Market Cooperative.
The purpose of each Market Cooperative is to manage regional advertising and marketing programs and create standardized promotional materials for members' local advertising, subject to Bombs Away's approval. Bombs Away Franchising must approve all advertising and promotional plans, and they can designate the advertising agencies used by the cooperative.
The Market Cooperative determines its members' dues through a majority vote, with contributions ranging from 1% to 5% of Gross Sales. Bombs Away Franchising retains the sole right to enforce franchisees' obligations to contribute to the Market Cooperative. Bombs Away Franchising also has the power to terminate any Market Cooperative, with any remaining funds being transferred to the Marketing Fund. Franchisees are required to spend at least 5% of Gross Sales each month on marketing, and contributions to a Market Cooperative may count toward this requirement at Bombs Away's discretion.
Bombs Away Franchising maintains significant control over the Market Cooperative, including its organization, governance, and the ability to set bylaws. While activities are typically decided by a majority vote of the members, Bombs Away Franchising can step in and make decisions if the members fail to do so after a 10-day notice. This structure ensures that marketing efforts align with the overall brand strategy and standards set by Bombs Away.