If a Deck Medic advertising cooperative is established, what are the franchisee's obligations regarding participation and payments?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
If two or more Deck Medic Businesses are operating within a geographic area, region, or market designated by us (a "designated market"), we reserve the right to establish and require your participation in a local or regional advertising cooperative within the designated market. If an advertising cooperative is established within a designated market that includes your Deck Medic Business(s), you will be required to participate in the cooperative and make on-going payments to the cooperative in such amounts and subject to such caps as established by the cooperative members. We anticipate that each Deck Medic Business franchisee will have one vote for each Deck Medic Business located within the cooperative market and those cooperative decisions shall be made based on approval of a simple majority vote with a quorum of not less than 25% of the designated cooperative members. Contributions to a local or regional cooperative that we designate shall count toward the satisfaction of your local marketing obligations and shall not exceed 5% of your monthly Gross Sales.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, if Deck Medic establishes a local or regional advertising cooperative within a designated market that includes a franchisee's Deck Medic business, the franchisee is required to participate in the cooperative. This participation includes making ongoing payments to the cooperative. The amounts and any caps on these payments are determined by the cooperative members themselves. Each Deck Medic Business franchisee will have one vote for each Deck Medic Business located within the cooperative market. Cooperative decisions are made based on a simple majority vote, provided that at least 25% of the designated cooperative members are present to form a quorum.
Contributions made to a local or regional cooperative that Deck Medic designates will count toward fulfilling the franchisee's local marketing obligations. This means that the money spent on the cooperative can be used to satisfy the requirement to spend a certain percentage of gross sales on local marketing. The FDD specifies that these contributions to the advertising cooperative will not exceed 5% of the franchisee's monthly Gross Sales.
This structure is fairly common in franchising, allowing franchisees in a specific geographic area to pool resources for more effective advertising campaigns. The cooperative model gives franchisees a direct say in how advertising funds are spent in their region, which can be beneficial. However, franchisees should be aware that participation is mandatory if Deck Medic establishes a cooperative, and they will be obligated to make payments as determined by the cooperative members, up to the specified cap of 5% of monthly Gross Sales. Franchisees should inquire about the likelihood of a cooperative being formed in their area and how it might impact their overall marketing strategy and budget.