How is the area of a Crab N Spice advertising cooperative defined?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
Local or Regional Advertising Cooperatives. We do not currently have any local or regional advertising cooperatives. We have the right to require you to participate in a local or regional advertising cooperative. We will define the area of the cooperative based on media markets, or other geographic criteria that we deem appropriate. Each franchisee in the area would have one vote per outlet (unless the franchisee is in default under its franchise agreement). The amount you must contribute to the cooperative will be determined by vote of the members, but not less than 1% of gross sales. If our own outlets are members of a cooperative, they must contribute to the cooperative on the same basis as franchisees, and they will vote on the same basis as other members. If our outlets have controlling voting power, there is no maximum on fees that could be imposed. We administer the cooperative, but we have the right to delegate responsibility for administration to an outside company such as an advertising agency or accounting firm, or to the franchisee members of the cooperative. We have the right to require the cooperative to operate from written bylaws or other governing documents that we determine. The documents are not currently available for you to review. Cooperatives will prepare annual financial statements which will be made available for review only by us and by the members of cooperative. We have the power to require cooperatives to be formed, changed, dissolved, or merged.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 20–27)
What This Means (2024 FDD)
According to the 2024 Crab N Spice Franchise Disclosure Document, the area of any local or regional advertising cooperative will be defined by Crab N Spice. The area will be based on media markets or other geographic criteria that Crab N Spice deems appropriate.
Each Crab N Spice franchisee within the cooperative's area has one vote per outlet, unless the franchisee is in default of their franchise agreement. The amount each franchisee contributes will be determined by a vote of the members, but it cannot be less than 1% of gross sales. If Crab N Spice owns outlets that are members of the cooperative, those outlets must contribute on the same basis as the franchisees and will vote on the same basis as other members.
It is important to note that if Crab N Spice outlets have controlling voting power within the cooperative, there is no maximum limit on the fees that could be imposed on franchisees. Crab N Spice will administer the cooperative, but they have the right to delegate this responsibility to an outside company or to the franchisee members themselves. Crab N Spice also has the right to require the cooperative to operate from written bylaws or other governing documents that they determine, although these documents are not currently available for review.