factual

Can the cooperative advertising fee for a Chop5 Salad Kitchen exceed the Local Advertising Commitment?

Chop5_Salad_Kitchen Franchise · 2024 FDD

Answer from 2024 FDD Document

10.4. Advertising Cooperative. We may, but need not, establish regional advertising cooperatives for purposes of creating and/or purchasing advertising programs for the benefit of all Restaurants located in a particular region. We may: (a) determine the boundaries of the cooperative; (b) specify the manner in which the cooperative is organized and governed; (c) require the cooperative to be administered in accordance with written bylaws, organizational documents or other governing documents that we approve; and (d) require you to participate in the cooperative according to its rules and procedures and abide by its decisions. You must pay the cooperative advertising fee, which will be due on each royalty payment due date or on such other date established by the cooperative. We may set the minimum cooperative advertising fee or we may allow the cooperative to set the cooperative advertising fee based on majority vote of its members. In either case, the cooperative advertising fee will not exceed the amount of your Local Advertising Commitment. We may either: (a) collect cooperative advertising fees and remit them to the applicable cooperative; or (b) require you to pay these fees directly to the cooperative. All cooperative advertising fees you pay are credited towards your Local Advertising Commitment. We reserve the right to form, change, merge or dissolve advertising cooperatives in our discretion.

Source: Item 23 — RECEIPT (FDD pages 50–178)

What This Means (2024 FDD)

According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, the cooperative advertising fee will not exceed the Local Advertising Commitment. Chop5 Salad Kitchen, at its discretion, may establish regional advertising cooperatives to create and purchase advertising programs benefiting restaurants in a specific region.

The franchisor may determine the cooperative's boundaries, specify its organization and governance, and require adherence to written bylaws. Franchisees are obligated to participate in the cooperative according to its rules and procedures and must pay the cooperative advertising fee on each royalty payment due date or another date set by the cooperative.

Chop5 Salad Kitchen may set the minimum cooperative advertising fee or allow the cooperative to set it by a majority vote of its members. All cooperative advertising fees paid by the franchisee are credited toward their Local Advertising Commitment. The franchisor retains the right to form, change, merge, or dissolve advertising cooperatives at its discretion.

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.