What is the minimum amount a Chocolate Bash franchisee must contribute to a local 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 Chocolate Bash's 2024 Franchise Disclosure Document, while the company does not currently have any local or regional advertising cooperatives, it retains the right to require franchisees to participate in one in the future. The area of the cooperative will be determined based on media markets or other geographic criteria deemed appropriate by Chocolate Bash. Each franchisee within the cooperative area will have one vote per outlet, unless they are in default of their franchise agreement.
The amount a Chocolate Bash franchisee must contribute to the cooperative will be determined by a vote of the members. However, the minimum contribution is set at 1% of gross sales. If Chocolate Bash's own outlets are members of the cooperative, they must contribute on the same basis as franchisees and will vote on the same basis as other members.
It's important to note that if Chocolate Bash's outlets have controlling voting power within the cooperative, there is no maximum limit on the fees that could be imposed on franchisees. Chocolate Bash will administer the cooperative but has the right to delegate this responsibility to an outside company or to the franchisee members. The cooperative may also be required to operate from written bylaws or other governing documents determined by Chocolate Bash. Cooperatives will prepare annual financial statements which will be made available for review only by Chocolate Bash and by the members of cooperative. Chocolate Bash has the power to require cooperatives to be formed, changed, dissolved, or merged.