How are Cooperative Advertising Fees credited towards other advertising obligations for Chop5 Salad Kitchen?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
Cooperative advertising fees are uniformly imposed on all Restaurants in the cooperative, including company-owned Restaurants. We may set the minimum cooperative advertising fee, which may be increased by majority vote of all members of the cooperative (but will not exceed the maximum amount specified in the table above). Each member is entitled to 1 vote for each Restaurant that is owned by the member and located in the cooperative. We and our affiliates will be members of the cooperative (and have the same voting rights as franchisees) with respect to company-owned Restaurants located in the cooperative. However, if the majority of Restaurants in the cooperative are company-owned Restaurants, we will not increase the cooperative advertising fee unless a majority of all franchisee members vote in favor of the increase. All cooperative advertising fees you pay are credited towards your Local Advertising Commitment. The maximum total amount we may charge at any given time for the brand fund fee, Local Advertising Commitment and Cooperative Advertising Fee is capped at 8.5% of Gross Sales. There were no advertising cooperatives in effect as of December 31, 2022.
Source: Item 6 — OTHER FEES (FDD pages 12–17)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, cooperative advertising fees paid by franchisees are credited towards their Local Advertising Commitment. This means that if Chop5 Salad Kitchen establishes regional advertising cooperatives, the fees franchisees pay into these cooperatives count towards the minimum amount they are required to spend on local advertising and marketing.
The document specifies that Chop5 Salad Kitchen may establish regional advertising cooperatives to pool advertising funds for specific regions. Franchisees may either pay these fees to Chop5 Salad Kitchen, who will then remit them to the cooperative, or they may be required to pay the fees directly to the cooperative. The cooperative advertising fees are uniformly imposed on all restaurants within the cooperative, including company-owned restaurants. The amount of the cooperative advertising fee is set by the cooperative itself, but it cannot exceed the franchisee's Local Advertising Commitment.
It's important to note that the maximum total amount Chop5 Salad Kitchen may charge for the Brand Fund fee, Local Advertising Commitment, and Cooperative Advertising Fee is capped at 8.5% of Gross Sales. As of December 31, 2022, there were no advertising cooperatives in effect. This information is crucial for prospective franchisees to understand how their advertising contributions are allocated and managed, and how they can participate in regional advertising efforts to promote their Chop5 Salad Kitchen restaurant.