If CB Franchising establishes a purchasing cooperative, on what terms and conditions may a Chocolate Bash franchisee be required to participate?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.4 Marketing Cooperatives. CB Franchising may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas.
If a Market Cooperative for the geographic area encompassing the Location has been established at the time Franchisee commences operations hereunder, Franchisee shall immediately become a member of such Market Cooperative.
If a Market Cooperative for the geographic area encompassing the Location is established during the term of this Agreement, Franchisee shall become a member of such Market Cooperative within 30 days.
CB Franchising shall not require Franchisee to be a member of more than one Market Cooperative.
If CB Franchising establishes a Market Cooperative:
- (a) Governance.
Each Market Cooperative will be organized and governed in a form and manner, and shall commence operations on a date, determined by CB Franchising.
CB Franchising may require the Market Cooperative to adopt bylaws or regulations prepared by CB Franchising.
Unless otherwise specified by CB Franchising, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members.
CB Franchising will be entitled to attend and participate in any meeting of a Market Cooperative.
Any Chocolate Bash business owned by CB Franchising in the Market Cooperative shall have the same voting rights as those owned by its franchisees.
Each Business owner will be entitled to cast one vote for each Business owned, provided, however, that a franchisee shall not be entitled to vote if it is in default under its franchise agreement.
If the members of a Market Cooperative are unable or fail to determine the manner in which Market Cooperative monies will be spent, CB Franchising may assume this decision-making authority after 10 days' notice to the members of the Market Cooperative.
- (b) Purpose.
Each Market Cooperative shall be devoted exclusively to administering regional advertising and marketing programs and developing (subject to CB Franchising's approval) standardized promotional materials for use by the members in local advertising and promotion.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
The 2024 Franchise Disclosure Document outlines the terms and conditions under which a Chocolate Bash franchisee may be required to participate in a market cooperative, which appears to be the closest equivalent to a purchasing cooperative described in the document. CB Franchising has the option to establish market advertising and promotional cooperative funds, referred to as "Market Cooperative," in specific geographic areas.
If a Market Cooperative exists in the franchisee's geographic area when they begin operations, they must immediately become a member. If a Market Cooperative is established during the term of the Franchise Agreement, the franchisee is required to join within 30 days. However, Chocolate Bash will not require a franchisee to be a member of more than one Market Cooperative.
The Market Cooperative will be organized and governed in a manner determined by Chocolate Bash, which may include adopting bylaws or regulations prepared by Chocolate Bash. Unless Chocolate Bash specifies otherwise, the activities of the Market Cooperative will be decided by a majority vote of its members. Each Chocolate Bash business owner gets one vote per business owned, but a franchisee in default under their franchise agreement cannot vote. Chocolate Bash is entitled to attend and participate in any Market Cooperative meeting and, if the members cannot agree on how to spend the Market Cooperative's funds, Chocolate Bash may assume decision-making authority after providing 10 days' notice to the members. The Market Cooperative is devoted to administering regional advertising and marketing programs and developing standardized promotional materials, subject to Chocolate Bash's approval, for use by the members in local advertising and promotion.