What is a 'Market Cooperative' as defined in the Desi District FDD?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
ct Franchise Group may use any marketing materials or campaigns developed by or on behalf of Franchisee, and Franchisee hereby grants an unlimited, perpetual, royalty-free license to Desi District Franchise Group for such purpose.
- 9.3 Market Cooperatives. Desi District Franchise Group may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative for the geographic area encompassing the Location has been established at the time Franchisee commences operations hereunder, Franchisee shall immediately become a member of such Market Cooperative. If a Market Cooperative for the geographic area encompassing the Location is established during the term of this Agreement, Franchisee shall become a member of such Market Cooperative within 30 days. Desi District Franchise Group shall not require
Franchisee to be a member of more than one Market Cooperative. If Desi District Franchise Group establishes a Market Cooperative:
- (a) Governance. Each Market Cooperative will be organized and governed in a form and manner, and shall commence operations on a date, determined by Desi District Franchise Group. Desi District Franchise Group may require the Market Cooperative to adopt bylaws or regulations prepared by Desi District Franchise Group. Unless otherwise specified by Desi District Franchise Group, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members. Desi District Franchise Group will be entitled to attend and participate in any meeting of a Market Cooperative. Any Desi District business owned by Desi District Franchise Group in the Market Cooperative shall have the same voting rights as those owned by its franchisees. Each Business owner will be entitled to cast one vote for each Business owned, provided, however, that a franchisee shall not be entitled to vote if it is in default under its franchise agreement. If the members of a Market Cooperative are unable or fail to determine the manner in which Market Cooperative monies will be spent, Desi District Franchise Group may assume this decision-making authority after 10 days' notice to the members of the Market Cooperative.
- (b) Purpose. Each Market Cooperative shall be devoted exclusively to administering regional advertising and marketing programs and developing (subject to Desi District Franchise Group's approval) standardized promotional materials for use by the members in local advertising and promotion.
- (c) Approval.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, a Market Cooperative is defined as a market advertising and promotional cooperative fund that Desi District Franchise Group may establish in any geographical area. If a Market Cooperative exists for the area encompassing a franchisee's location when they begin operations, the franchisee must immediately become a member. If a Market Cooperative is established during the term of the Franchise Agreement, the franchisee must join within 30 days. Desi District will not require franchisees to be members of more than one Market Cooperative.
The Market Cooperative is devoted to administering regional advertising and marketing programs and developing standardized promotional materials for use by its members in local advertising and promotion, subject to Desi District's approval. The activities of each Market Cooperative are decided by a majority vote of its members, unless otherwise specified by Desi District Franchise Group, which is entitled to attend and participate in any meeting. Any Desi District business owned by Desi District Franchise Group in the Market Cooperative has the same voting rights as those owned by its franchisees.
Franchisees should note that the majority vote of the Market Cooperative determines the dues to be paid by members, set between 1% and 5% of Gross Sales. Desi District retains the right to enforce a franchisee's obligation to contribute to the Market Cooperative and may also terminate any Market Cooperative. If a Market Cooperative is terminated, any remaining funds will be transferred back to the franchisees based on their contributions. Franchisees are also required to spend up to 2% of Gross Sales each month on marketing the Business, and Desi District may determine that contributions to a Market Cooperative count toward this required spending.