How many votes does each Chocolate Bash franchisee have in a local or regional advertising cooperative?
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
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 19–25)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, each franchisee in a local or regional advertising cooperative has one vote per outlet, provided they are not in default under 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. Chocolate Bash's own outlets, if members of the cooperative, must contribute on the same basis as franchisees and vote on the same basis as other members.
However, Chocolate Bash retains significant control over these cooperatives. If Chocolate Bash's outlets have controlling voting power, there is no maximum on the fees that could be imposed on franchisees. Chocolate Bash also administers the cooperative, although they have the right to delegate this responsibility to an outside company or to the franchisee members. Furthermore, Chocolate Bash has the right to require the cooperative to operate from written bylaws or other governing documents that they determine.
It is important to note that Chocolate Bash does not currently have any local or regional advertising cooperatives, but they reserve the right to require franchisees to participate in one in the future. This means that while the voting structure is defined, the actual implementation and impact on franchisees will depend on whether Chocolate Bash decides to establish these cooperatives and how they are structured. Prospective franchisees should consider the potential financial implications of mandatory contributions to these cooperatives, as well as the level of control Chocolate Bash retains over their operation.