Are Casiola franchisees required to contribute to Advertising Cooperatives?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
At all times Franchisor, in Franchisor's Reasonable Business Judgment, possesses the right to authorize, establish, designate and de-authorize a local or regional advertising cooperative within those markets that Franchisor designates (the "Advertising Cooperative"). Franchisee agrees that Franchisor possesses the sole and exclusive right to designate any geographic area in which two or more Casiola Business franchises are located as a region for the purpose of establishing an Advertising Cooperative. If Franchisee's Casiola Business or Operating Market is located within the geographic area of an Advertising Cooperative, franchisee must participate in and contribute to the Advertising Cooperative. Franchisee agrees to the following:
- (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
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, franchisees may be required to participate in and contribute to an Advertising Cooperative if one exists in their operating market or Casiola Business location. Casiola retains the right to authorize, establish, designate, and de-authorize these cooperatives in markets they designate.
Franchisees must participate fully and execute all required documents if an Advertising Cooperative is established in their area, either at the time of the agreement or during its term. The franchisee's contributions to the Advertising Cooperative are determined by the cooperative itself, but these contributions will count toward the franchisee's minimum local marketing obligations as outlined in Article 9.B of the agreement. However, the contributions cannot exceed the franchisee's local minimum marketing obligations.
The Advertising Cooperative is intended to administer marketing programs and develop media, all subject to Casiola's review and approval. Each cooperative is governed by its own documents, and franchisees must submit required statements and reports to both the cooperative and Casiola. Casiola businesses owned by Casiola or its affiliates are not required to contribute to the Advertising Cooperative. All marketing materials, plans, or media must receive prior written approval from Casiola.