What recourse does a Burneys Sweets More franchisee have if the Cooperative is mismanaged?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
ve. 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)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, the members of the Cooperative, along with their governing body, are responsible for administering the Cooperative. Each Burneys Sweets More franchised business that is a member of the Cooperative is entitled to one vote, giving franchisees a direct say in the Cooperative's operations. The Cooperative is required to prepare quarterly and annual financial statements, which must be made available to all members, allowing franchisees to stay informed about the Cooperative's financial health. These written governing documents are subject to Franchisor's approval.
However, the FDD also states that Burneys Sweets More and its affiliates have no fiduciary duty to the franchisee regarding the collection or use of Cooperative monies or any aspect of the Cooperative's operation. This means that Burneys Sweets More is not legally obligated to act in the franchisee's best interest concerning the Cooperative's funds.
Given these points, if a Burneys Sweets More franchisee believes the Cooperative is being mismanaged, their primary recourse would be through their voting rights and participation in the Cooperative's governance. They can also review the financial statements to identify any irregularities. However, due to the lack of fiduciary duty on the part of Burneys Sweets More, direct legal action against the franchisor for mismanagement of the Cooperative may be limited. A prospective franchisee should seek clarification from Burneys Sweets More about specific mechanisms for addressing and resolving disputes related to Cooperative management and what additional oversight or support the franchisor provides to ensure proper governance.