In lieu of a Regional Advertising Fund, can Chicken Guy establish a Regional Co-op?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
E. Regional Co-op.
- (1) In lieu of a Regional Advertising Fund for the area that includes the Franchised Location, Chicken Guy, in its sole discretion, may establish a Regional Co-op. Franchisee shall contribute to the Regional Co-op in the amount set forth in the attached Data Sheet, as subsequently modified by Chicken Guy. Chicken Guy, if it so elects, may prepare bylaws to be used by the Regional Co-op and may require the Regional Co-op to incorporate.
- (2) Monies in the Regional Co-op may be spent for the purposes determined by majority vote of the Regional Co-op on the basis of one vote for each Chicken Guy! Restaurant in the Regional Co-op. Unless otherwise consented to in writing by Chicken Guy, the Regional Co-op shall only conduct advertising that conforms with those advertising and sales promotions specified by Chicken Guy from time to time (including the media in which conducted). All advertising shall be submitted to Chicken Guy prior to first use as provided in Section 9.F., and all advertising shall adhere to the standards set forth in Section 9.F. Each franchisee who is a member of the Regional Co-op shall be entitled to vote on Regional Co-op matters; however, a franchisee shall not be entitled to vote if it is in default under its franchise agreement or any other agreement with Chicken Guy or its affiliates. Chicken Guy always shall be a member of the Regional Co-op and be entitled to attend and fully participate in Regional Co-op meetings, but Chicken Guy shall not have a vote unless it or its affiliates operates Chicken Guy! Restaurants in the area covered by the Regional Co-op. Chicken Guy shall be given at least 3 days' prior written notice of Regional Co-op meetings. If the members of the Regional Co-op are unable or fail to determine the manner in which Regional Co-op monies should be spent, Chicken Guy may assume this decision making authority following 10 days' advance written notice to the members of the Regional Co-op.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy has the option to establish a Regional Co-op in place of a Regional Advertising Fund. The decision to establish a Regional Co-op is at Chicken Guy's sole discretion. If a Regional Co-op is established, franchisees are required to contribute an amount as specified in the Data Sheet, which may be modified by Chicken Guy.
Within a Regional Co-op, funds are allocated based on a majority vote, with each Chicken Guy restaurant having one vote. The advertising conducted by the Regional Co-op must align with Chicken Guy's standards and be pre-approved by them. Each franchisee that is a member of the Regional Co-op is entitled to vote on matters unless they are in default of their franchise agreement. Chicken Guy is always a member of the Regional Co-op and can attend meetings, but only has a vote if they operate a Chicken Guy restaurant in the area.
Chicken Guy also retains the right to terminate or convert the Regional Co-op into a Regional Advertising Fund. If the members of the Regional Co-op cannot agree on how to spend the money, Chicken Guy can take over the decision-making after providing a 10-day written notice. Chicken Guy may also grant exemptions from Regional Co-op membership to franchisees upon written request.