Can Care Plus Medical Ucc require franchisees to join a purchasing cooperative?
Care_Plus_Medical_Ucc Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.4 Purchasing. Care Plus Medical UCC may negotiate prices and terms with vendors on behalf of the System.
Care Plus Medical UCC may receive rebates, payments or other consideration from vendors in connection with purchases by franchisees.
Care Plus Medical UCC has the right (but not the obligation) to collect payments from Franchisee on behalf of a vendor and remit the payments to the vendor and to impose a reasonable markup or charge for administering the payment program.
Care Plus Medical UCC may implement a centralized purchasing system.
Care Plus Medical UCC may establish a purchasing cooperative and require Franchisee to join and participate in the purchasing cooperative on such terms and conditions as Care Plus Medical UCC may determine.
Source: Item 22 — CONTRACTS (FDD page 41)
What This Means (2024 FDD)
According to Care Plus Medical Ucc's 2024 Franchise Disclosure Document, Care Plus Medical Ucc has the authority to establish a purchasing cooperative and mandate that franchisees become members. The terms and conditions of this cooperative are determined by Care Plus Medical Ucc. This means that as a franchisee, you could be required to join a purchasing cooperative set up by Care Plus Medical Ucc.
Care Plus Medical Ucc may also establish market advertising and promotional cooperative funds, called "Market Cooperative", in any geographical areas. If a Market Cooperative exists in the franchisee's location when they start operations, they must immediately become a member. If a Market Cooperative is established during the term of the Franchise Agreement, the franchisee must join within 30 days. Care Plus Medical Ucc will not require franchisees to be a member of more than one Market Cooperative.
These cooperatives are designed to administer regional advertising and marketing programs and develop standardized promotional materials. The majority vote of the Market Cooperative determines the dues to be paid by members, including franchisees, but these dues will not be less than 1% and not more than 5% of Gross Sales. Care Plus Medical Ucc retains significant control over these cooperatives, including the ability to set bylaws, attend meetings, and even make decisions if the members fail to do so. Care Plus Medical Ucc also has the right to enforce the obligations of franchisees to contribute to the Market Cooperative and may terminate any Market Cooperative, with any remaining funds being transferred to the Marketing Fund.