If Chocolate Bash outlets are members of a cooperative, how do they vote?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
Local or Regional Advertising Cooperatives. We do not currently have any local or regional advertising cooperatives. We have the right to require you to participate in a local or regional advertising cooperative. We will define the area of the cooperative based on media markets, or other geographic criteria that we deem appropriate. Each franchisee in the area would have one vote per outlet (unless the franchisee is in default under its franchise agreement). The amount you must contribute to the cooperative will be determined by vote of the members, but not less than 1% of gross sales. If our own outlets are members of a cooperative, they must contribute to the cooperative on the same basis as franchisees, and they will vote on the same basis as other members. If our outlets have controlling voting power, there is no maximum on fees that could be imposed. We administer the cooperative, but we have the right to delegate responsibility for administration to an outside company such as an advertising agency or accounting firm, or to the franchisee members of the cooperative. We have the right to require the cooperative to operate from written bylaws or other governing documents that we determine. The documents are not
currently available for you to review. Cooperatives will prepare annual financial statements which will be made available for review only by us and by the members of cooperative. We have the power to require cooperatives to be formed, changed, dissolved, or merged.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 19–25)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, if local or regional advertising cooperatives are established, each Chocolate Bash franchisee within the cooperative's area receives one vote per outlet, provided they are not in default of their franchise agreement. The amount each franchisee contributes to the cooperative is determined by a vote of the members, but it will not be less than 1% of gross sales.
If Chocolate Bash itself owns outlets that are members of the cooperative, these outlets must contribute on the same basis as the franchisees and will vote on the same basis as other members. However, if Chocolate Bash's own outlets have controlling voting power within the cooperative, there is no limit to the fees that could be imposed on the members.
Chocolate Bash retains significant control over these cooperatives, including the right to administer them directly or delegate administration to an outside company or the franchisee members. Chocolate Bash also has the power to require cooperatives to be formed, changed, dissolved, or merged, and can mandate that the cooperative operate from written bylaws or other governing documents that Chocolate Bash determines. These documents are not currently available for franchisee review. Cooperatives will prepare annual financial statements which will be made available for review only by Chocolate Bash and by the members of cooperative.