Who can increase the Cooperative Advertising Fee for Chop5 Salad Kitchen, and by what method?
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.
Source: Item 6 — OTHER FEES (FDD pages 12–17)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, the cooperative advertising fee can be increased by a majority vote of all members of the cooperative. Each member gets one vote for each Chop5 Salad Kitchen restaurant they own within the cooperative. This means that both franchisees and Chop5 Salad Kitchen itself (for company-owned restaurants) are members and have voting rights.
However, there's a condition: if the majority of restaurants in the cooperative are company-owned, Chop5 Salad Kitchen cannot increase the fee unless a majority of the franchisee members specifically vote in favor of the increase. This protects franchisees from having fee increases imposed solely by the franchisor in areas where company-owned stores dominate.
The cooperative advertising fee is capped, as the maximum total amount Chop5 Salad Kitchen 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.