Who administers the advertising cooperative for Ella Cafe franchisees?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
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 Coffee House (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% and not more than 5% of Gross Sales. If our own Coffee House 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. 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 24–33)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the franchisor initially administers any local or regional advertising cooperatives. However, Ella Cafe retains the right to delegate this responsibility to an outside company, such as an advertising agency or accounting firm, or to the franchisee members of the cooperative.
Each franchisee within the cooperative area has one vote per coffee house, unless they are in default of their franchise agreement. The amount each franchisee contributes is determined by a vote of the members, but it must be between 1% and 5% of gross sales. If Ella Cafe owns a coffee house within the cooperative, they must contribute on the same basis as the franchisees and have the same voting rights.
Ella Cafe also has the power to require cooperatives to be formed, changed, dissolved, or merged. The cooperative will prepare annual financial statements, but these statements are only available for review by Ella Cafe and the members of the cooperative. Ella Cafe also has the right to require the cooperative to operate from written bylaws or other governing documents that they determine.