Is participation in a Market Cooperative mandatory for Chocolate Bash franchisees?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
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)
According to Chocolate Bash's 2024 Franchise Disclosure Document, participation in a Market Cooperative is mandatory under certain conditions. If a Market Cooperative exists for the geographic area encompassing a franchisee's location when the franchisee begins operations, the franchisee must immediately become a member. Similarly, if a Market Cooperative is established during the term of the Franchise Agreement for the franchisee's area, 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.
Chocolate Bash retains significant control over the Market Cooperative. The franchisor determines the form, manner of organization, and start date of the Market Cooperative. Chocolate Bash may also require the Market Cooperative to adopt bylaws or regulations that they prepare. While the activities of the Market Cooperative are typically decided by a majority vote of its members, Chocolate Bash is entitled to attend and participate in any meeting and has the same voting rights as franchisees for any Chocolate Bash businesses they own within the cooperative.
If the members of a Market Cooperative cannot agree on how to spend the cooperative's funds, Chocolate Bash can assume decision-making authority after providing 10 days' notice to the members. Each Market Cooperative is dedicated to administering regional advertising and marketing programs and developing standardized promotional materials, subject to Chocolate Bash's approval, for use by its members in local advertising and promotion. This structure ensures that marketing efforts are coordinated and aligned with the Chocolate Bash brand standards, but it also means franchisees may have limited autonomy in local marketing decisions if Chocolate Bash intervenes.