If my Chop5 Salad Kitchen restaurant is in a region with an advertising cooperative, what are my obligations?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
We may, but need not, form advertising cooperatives for the benefit of all Restaurants located in a particular region. We will determine the boundaries of the cooperative. In most instances, the boundaries will coincide with zip codes, designated marketing areas or municipal boundaries. We will specify the manner in which the cooperative is organized and governed. We may choose between: (a) administering the cooperative ourselves; or (b) establishing an advertising council, comprised by the cooperative's members, to administer the cooperative. We may require that the cooperative be administered in accordance with written bylaws, organizational documents or other governing documents that we approve.
If your Restaurant is located within a region subject to an advertising cooperative you must: (a) participate in the cooperative according to its rules and procedures and abide by its decisions; and (b) pay a cooperative advertising fee. We may set the minimum cooperative advertising fee or we may allow the cooperative to set the fee based on majority vote of its members. In either case, the cooperative advertising fee will not exceed your Local Advertising Commitment. All cooperative advertising fees you pay are credited against your Local Advertising Commitment. Any company-owned Restaurant located in the cooperative will contribute on the same basis as franchisees.
Advertising cooperatives are not required to prepare annual or periodic financial statements. Any financial statements that are prepared will be made available to you upon request. We reserve the right to form, change, merge or terminate advertising cooperatives at any time.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–36)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, if your restaurant is located in a region subject to an advertising cooperative, you have specific obligations. You must participate in the cooperative according to its rules and procedures and abide by its decisions. Additionally, you are required to pay a cooperative advertising fee.
The cooperative advertising fee can be set either by Chop5 Salad Kitchen or by a majority vote of the cooperative's members. Regardless of who sets the fee, it will not exceed your Local Advertising Commitment. All cooperative advertising fees you pay are credited against your Local Advertising Commitment, ensuring that you are not paying more for advertising than initially agreed upon in your franchise agreement. Company-owned restaurants within the cooperative will contribute on the same basis as franchisees, ensuring equitable participation.
Chop5 Salad Kitchen may form advertising cooperatives for the benefit of restaurants in a particular region, defining the boundaries based on zip codes, designated marketing areas, or municipal boundaries. The franchisor will specify how the cooperative is organized and governed, choosing between administering it themselves or establishing an advertising council comprised of the cooperative's members. The cooperative may be required to operate under written bylaws or other governing documents approved by Chop5 Salad Kitchen. These cooperatives are not required to prepare annual or periodic financial statements, but any prepared statements will be available to you upon request. Chop5 Salad Kitchen retains the right to form, change, merge, or terminate advertising cooperatives at any time.