Does Deka Lash have to approve the contribution amount determined by the members of the Local Advertising Cooperative?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
If we establish a Local Advertising Cooperative for your area, you and franchisor-owned outlets in the Cooperative must contribute to the Local Advertising Cooperative the amounts required by its members, and all outlets must contribute on the same basis (which may be a uniform percent of revenue, a fixed amount, etc.). The amount of contribution will be determined by the members of the Local Advertising Cooperative, subject to our approval. Each member will have one vote for each Franchised Business operated by the member within the geographic area subject to the Local Advertising Cooperative.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 32–40)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, if a Local Advertising Cooperative is established for a franchisee's area, the franchisee must contribute to it. The amount of contribution is determined by the members of the Local Advertising Cooperative. However, Deka Lash retains the right to approve the contribution amount determined by the members.
This means that while franchisees in the cooperative collectively decide on the contribution amounts, Deka Lash has the final say. This ensures that the contribution levels are aligned with Deka Lash's broader marketing and financial strategies.
For a prospective franchisee, this implies that while they have a voice in determining the local advertising budget, Deka Lash can override their decision. Franchisees should consider this when evaluating the potential costs and benefits of joining a Local Advertising Cooperative. They should also inquire about Deka Lash's historical practices regarding approval of contribution amounts to understand the extent of the franchisor's influence.