Does the Casiola franchise agreement require franchisees to meet required advertising obligations?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
- (1) If Franchisor previously instituted or, in the future, institutes an Advertising Cooperative that includes, in whole or in part, Franchisee's Operating Market or Franchisee's Casiola Business Location, Franchisee shall participate in and make such on-going financial contributions to the Advertising Cooperative, as determined by the Advertising Cooperative;
- (2) Franchisor may establish foundational and organizational requirements of the Advertising Cooperative including voting provisions that allows the Advertising Cooperative to make decisions based on the simple majority vote (one vote per franchisee Casiola Business located within the designated area of the Advertising Cooperative) with a quorum constituting 25% of those franchisees within the Advertising Cooperative;
- (3) Unless otherwise authorized and approved by Franchisor in writing, each Advertising Cooperative shall be organized for the exclusive purpose of administering marketing programs and the development of media (all subject to the review and approval of Franchisor) for use by members of the Advertising Cooperative in local or regional marketing;
- (4) If at the time of execution of this Agreement an Advertising Cooperative has been established for a geographic area that includes, in whole or in part, Franchisee's Casiola Business location or Operating Market, or if such Advertising Cooperative is established during the Term of this Agreement, Franchisee shall fully participate in the Advertising Cooperative and Franchisee shall execute, at the request of Franchisor, all documents required by Franchisor and Franchisee shall become a member of the Advertising Cooperative subject to the terms of those documents;
- (5) Franchisee shall contribute to the Advertising Cooperative in the amounts as determined and required by the Advertising Cooperative or, otherwise in accordance with those documents governing the operation of the Advertising Cooperative; provided, however, Franchisee's contributions to the Advertising Cooperative shall not exceed Franchisee's local minimum marketing obligations set forth
in Article 9.B. of this Agreement and Franchisee's contributions to the Advertising Cooperative shall count toward satisfaction of Franchisee's minimum local marketing obligations set forth in Article 9.B.;
- (6) Franchisee shall submit to the Advertising Cooperative and to Franchisor such statements and reports as may be required by the Advertising Cooperative and approved by Franchisor. All contributions to the Advertising Cooperative shall be maintained and administered in accordance with the documents governing the Advertising Cooperative. The Advertising Cooperative shall be operated solely for the purpose of collection and expenditure of the Advertising Cooperative's fees for the purpose set forth in this Article 9.C.;
- (7) No marketing materials, plans, or media may be used by the Advertising Cooperative or its members without the prior written approval of Franchisor;
- (8) Casiola Businesses owned by Franchisor and/or Franchisor's affiliates that are located within the geographic area of the designated Advertising Cooperative are not required to make contributions to the Advertising Cooperative; and
- (9) The Advertising Cooperative must comply with the rules and regulations established by Franchisor in the Operations Manual which may be modified by Franchisor from time to time.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to the 2024 Casiola Franchise Disclosure Document, franchisees may be required to participate in an Advertising Cooperative if one is established for their operating market. If an Advertising Cooperative is in place or is created during the term of the agreement, the franchisee must participate fully and execute all required documents. Franchisees are obligated to contribute financially to the Advertising Cooperative as determined by the cooperative itself.
However, the franchisee's contribution to the Advertising Cooperative will not exceed the franchisee's local minimum marketing obligations as outlined in Article 9.B of the Franchise Agreement. Contributions to the Advertising Cooperative count toward fulfilling these minimum local marketing obligations. The Advertising Cooperative is intended to administer marketing programs and develop media for its members' local or regional marketing efforts, subject to Casiola's review and approval.
The Advertising Cooperative makes decisions based on a simple majority vote, with each franchisee having one vote per Casiola Business within the cooperative's designated area. A quorum requires 25% of the franchisees within the Advertising Cooperative. Franchisees must also submit statements and reports as required by the Advertising Cooperative and approved by Casiola. All marketing materials, plans, or media used by the Advertising Cooperative or its members require Casiola's prior written approval.
Casiola retains significant control over the Advertising Cooperative, including establishing foundational requirements, organizational structure, and voting provisions. Casiola also requires compliance with rules and regulations set forth in the Operations Manual, which Casiola can modify. Casiola Businesses owned by Casiola or its affiliates within the Advertising Cooperative's geographic area are not required to contribute to the cooperative.