factual

How many votes does a Crab N Spice franchisee have in a local or regional advertising cooperative?

Crab_N_Spice Franchise · 2024 FDD

Answer 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, each franchisee in a local or regional advertising cooperative has one vote per outlet, provided they are not in default under their franchise agreement. The amount a franchisee must contribute to the cooperative will be determined by a vote of the members, but it will not 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 franchisees and will vote on the same basis as other members. However, if Crab N Spice outlets have controlling voting power, there is no maximum on the fees that could be imposed on franchisees.

Crab N Spice retains significant control over these cooperatives, including the right to administer them, delegate administration to outside companies or franchisee members, require written bylaws, and demand the cooperatives operate from governing documents that Crab N Spice determines. Furthermore, Crab N Spice has the power to require cooperatives to be formed, changed, dissolved, or merged, which gives them substantial influence over the cooperative's activities and direction.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.