If required to participate in a Chop5 Salad Kitchen advertising cooperative, must I abide by its decisions?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
le discretion, you may not: (i) develop, host, create or otherwise maintain a website or other online or digital presence in connection with your Restaurant, including any website bearing our Marks; (ii) conduct digital or online advertising or marketing; or (iii) engage in ecommerce.
- 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 Re
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, if the franchisor establishes regional advertising cooperatives, franchisees may be required to participate and abide by the cooperative's decisions. Chop5 Salad Kitchen may determine the cooperative's boundaries and specify its organization and governance. The cooperative must be administered according to written governing documents approved by Chop5 Salad Kitchen.
As a franchisee, you would be obligated to pay a cooperative advertising fee, due either on the royalty payment date or another date set by the cooperative. Chop5 Salad Kitchen may set the minimum fee or allow the cooperative to do so via a majority vote of its members; however, the cooperative advertising fee will not exceed your Local Advertising Commitment. These fees can be collected by Chop5 Salad Kitchen and remitted to the cooperative, or you may be required to pay them directly. All cooperative advertising fees are credited toward your Local Advertising Commitment.
Chop5 Salad Kitchen retains the right to form, change, merge, or dissolve advertising cooperatives at its discretion. The maximum total amount charged for brand fund fees, the Local Advertising Commitment, and Cooperative Advertising Fees is capped at 8.5% of Gross Sales. This means that while you must abide by the cooperative's decisions if required to participate, your total advertising expenditure is limited to this percentage of your sales.