Can Bombs Away require the advertising cooperative to operate from written bylaws or other governing documents?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Local or Regional Advertising Cooperatives. We do not currently have any local or regional advertising cooperatives. We have the right to require you to participate in a local or regional advertising cooperative. We will define the area of the cooperative based on media markets, or other geographic criteria that we deem appropriate. Each franchisee in the area would have one vote per outlet (unless the franchisee is in default under its franchise agreement). The amount you must contribute to the cooperative will be determined by vote of the members, but not less than 1% of gross sales and not more than 5% of gross sales. If our own outlets are members of a cooperative, they must contribute to the cooperative on the same basis as franchisees, and they will vote on the same basis as other members. We administer the cooperative, but we have the right to delegate responsibility for administration to an outside company such as an advertising agency or accounting firm, or to the franchisee members of the cooperative. We have the right to require the cooperative to operate from written bylaws or other governing documents that we determine. The documents are not currently available for you to review. Cooperatives will prepare
annual financial statements which will be made available for review only by us and by the members of cooperative. We have the power to require cooperatives to be formed, changed, dissolved, or merged.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 18–23)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Bombs Away has the right to require any local or regional advertising cooperative to operate using written bylaws or other governing documents that Bombs Away determines. However, these documents are not currently available for franchisee review. Bombs Away also has the power to require cooperatives to be formed, changed, dissolved, or merged.
Each franchisee within a cooperative's area has one vote per outlet, unless they are in default of their franchise agreement. The amount each franchisee contributes to the cooperative is determined by a vote of the members, but it must be between 1% and 5% of gross sales. If Bombs Away owns outlets that are members of the cooperative, those outlets must contribute on the same basis as franchisees and will vote on the same basis as other members.
Bombs Away administers the cooperative but can delegate this responsibility to an outside company or to the franchisee members. Cooperatives will prepare annual financial statements, but these statements will only be available for review by Bombs Away and the members of the cooperative. This gives Bombs Away significant control over the advertising cooperatives and their operations, which may impact how advertising funds are spent and managed.
Prospective franchisees should inquire about the specific written bylaws or governing documents that Bombs Away might require for advertising cooperatives, even though they are not currently available for review. Understanding these documents will be crucial for franchisees to understand their rights and obligations within the cooperative, as well as how the cooperative will be managed and how funds will be allocated.