factual

Are the written bylaws or governing documents for Chocolate Bash advertising cooperatives available for review?

Chocolate_Bash Franchise · 2024 FDD

Answer from 2024 FDD Document

rtising 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.

Advertising Fund. You and all other franchisees must contribute to our Marketing Fund. Your contribution is 1% of gross sales per week.

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, the written bylaws or other governing documents for local or regional advertising cooperatives are not currently available for franchisee review. Chocolate Bash has the right to require franchisees to participate in a local or regional advertising cooperative, defining the area based on media markets or other geographic criteria.

Each franchisee within the cooperative area has one vote per outlet, unless they are in default of their franchise agreement. The contribution amount to the cooperative is determined by the members' vote but cannot be less than 1% of gross sales. If Chocolate Bash's own outlets are members, they contribute and vote on the same basis as franchisees. However, if Chocolate Bash's outlets have controlling voting power, there is no maximum on the fees that could be imposed on franchisees.

Chocolate Bash administers the cooperative but can delegate this responsibility to an outside company or the franchisee members. While Chocolate Bash has the right to require the cooperative to operate from written bylaws or other governing documents, these documents are not currently available for franchisees to review. The FDD states that cooperatives will prepare annual financial statements, but these will only be available for review by Chocolate Bash and the cooperative members.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.