What terms and conditions can CB Franchising determine for a purchasing cooperative that a Chocolate Bash franchisee is required to join?
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)
According to Chocolate Bash's 2024 Franchise Disclosure Document, CB Franchising has significant control over market advertising and promotional cooperatives. CB Franchising determines the form, manner of organization, and the date of commencement for any Market Cooperative. They can also require the Market Cooperative to adopt bylaws or regulations that Chocolate Bash Franchising prepares.
Unless CB Franchising specifies otherwise, the activities carried on by each Market Cooperative are decided by a majority vote of its members. CB Franchising is entitled to attend and participate in any Market Cooperative meeting and any Chocolate Bash business owned by CB Franchising in the Market Cooperative has the same voting rights as those owned by its franchisees. Each business owner gets one vote per business owned, but a franchisee in default under their franchise agreement cannot vote.
If the members of a Market Cooperative cannot agree on how to spend the Market Cooperative's money, CB Franchising can take over the decision-making authority after giving the members 10 days' notice. Each Market Cooperative must focus exclusively on managing regional advertising and marketing programs and developing standardized promotional materials (subject to CB Franchising's approval) for members to use in local advertising and promotion. This means that while franchisees may participate in the Market Cooperative, Chocolate Bash retains considerable power over its structure, governance, and activities.