What happens to the Cooperative funds if a Burneys Sweets More franchise is terminated?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
f).
(iv) Members of the Cooperative shall make contributions to the Cooperative in such amounts as are determined by the governing body of the Cooperative. Each member of the Cooperative shall make contributions to the Cooperative on the same basis as the other members, whether owned by Franchisee, another franchisee, Franchisor, or Franchisor's affiliates. In no event shall members be required to contribute more than Four Percent (4%) of monthly Gross Sales.
(v) Franchisee shall make its contributions to the Cooperative on the date and in the manner designated by the Cooperative. Franchisee shall also submit such statements and reports as may be designated from time to time by the Cooperative. The Cooperative shall submit to Franchisor such statements and reports as Franchisor may designate from time to time. The Cooperative shall prepare written governing documents that shall be available to Franchisee and Franchisor for review. These written governing documents are subject to Franchisor's approval. The Cooperative is responsible for determining its own voting procedures; however, each BURNEY'S SWEETS & MORE franchised business that is a member of the Cooperative is entitled to one vote. The Cooperative must prepare quarterly and annual financial statements and these statements must be made available to all members in the Cooperative. The members of the Cooperative and their governing body are responsible for administering the Cooperative.
(vi) Notwithstanding the foregoing to the contrary, Franchisor, in its sole discretion, may grant to any BURNEY'S SWEETS & MORE franchised business an exemption from the requirement of membership in a Cooperative. Such an exemption may be for any length of time and may apply to one (1) or more businesses owned by the exempted party.
(vii) The Cooperative is not a trust fund. Franchisor and its affiliates shall have no fiduciary duty to Franchisee in connection with the collection or use of the Cooperative monies or any aspect of the operation of any Cooperative.
(d) Supplemental Advertising.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
The 2025 Burneys Sweets More Franchise Disclosure Document outlines several aspects of the Cooperative, but it does not explicitly state what happens to the funds if a franchise is terminated. The document details how the Cooperative is organized, its purpose, and how members contribute. Specifically, members contribute amounts determined by the Cooperative's governing body, up to a maximum of 4% of monthly Gross Sales. Franchisees make contributions on the date and in the manner designated by the Cooperative and must submit required statements and reports. The Cooperative is also obligated to provide statements and reports to Burneys Sweets More. The Cooperative must have written governing documents available for review by both the franchisee and Burneys Sweets More, subject to Burneys Sweets More's approval. Each Burneys Sweets More franchised business that is a member of the Cooperative gets one vote, and the Cooperative must prepare quarterly and annual financial statements available to all members. The members and their governing body are responsible for administering the Cooperative. Burneys Sweets More may grant exemptions from Cooperative membership. The FDD states that the Cooperative is not a trust fund, and Burneys Sweets More has no fiduciary duty to the franchisee regarding Cooperative monies.
However, the FDD does not specify the procedure for handling a franchisee's contributions or share of the Cooperative funds upon termination. It is unclear whether a terminated franchisee would be entitled to a refund of their contributions, whether those funds would be redistributed among the remaining members, or whether they would be forfeited to the Cooperative.
Therefore, a prospective Burneys Sweets More franchisee should directly ask the franchisor for clarification on the specific policies regarding the handling of Cooperative funds in the event of a franchise termination. Understanding these policies is crucial for assessing the financial implications of termination and the overall risks associated with the franchise agreement.