Does Chop5 Salad Kitchen have to establish regional advertising cooperatives?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer 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.
- 10.5. Cap on Required Advertising Expenditures. Notwithstanding anything in §10 to the contrary, the maximum total amount we may charge you at any given time for brand fund fees, the Local Advertising Commitment and Cooperative Advertising Fees, on a combined basis, shall be capped at 8.5% of Gross Sales.
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, Chop5 Salad Kitchen may, but does not have to, establish regional advertising cooperatives. These cooperatives would be for creating and/or purchasing advertising programs to benefit all Chop5 Salad Kitchen restaurants in a specific region. Chop5 Salad Kitchen has the authority to determine the cooperative's boundaries and how it is organized and governed. They can also require the cooperative to have written bylaws or governing documents that Chop5 Salad Kitchen approves.
If a regional advertising cooperative is established, Chop5 Salad Kitchen can require franchisees to participate according to the cooperative's rules and procedures. Franchisees would be required to pay a cooperative advertising fee, which is due either on the royalty payment date or another date set by the cooperative. Chop5 Salad Kitchen may set the minimum cooperative advertising fee or allow the cooperative to set the fee by a majority vote of its members. The cooperative advertising fee will not exceed the franchisee's Local Advertising Commitment.
Chop5 Salad Kitchen can either collect the cooperative advertising fees and remit them to the cooperative or require franchisees to pay the fees directly to the cooperative. All cooperative advertising fees paid by the franchisee are credited toward their Local Advertising Commitment. Chop5 Salad Kitchen also reserves the right to form, change, merge, or dissolve advertising cooperatives at their discretion. The maximum total amount Chop5 Salad Kitchen may charge a franchisee for brand fund fees, the Local Advertising Commitment, and Cooperative Advertising Fees is capped at 8.5% of Gross Sales.