What is an Ella Cafe Market Cooperative?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
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, Franchisor 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 Franchisor' approval) standardized promotional materials for use by the members in local advertising and promotion.
- (c) Approval. No advertising or promotional plans or materials may be used by a Market Cooperative or furnished to its members without the prior approval of Franchisor pursuant to Section 9.1. Franchisor may designate the national or regional advertising agencies used by the Market Cooperative.
- (d) Funding. The majority vote of the Market Cooperative will determine the dues to be paid by members of the Market Cooperative, including Franchisee, but not less than 1% and not more than 5% of Gross Sales.
- (e) Enforcement. Only Franchisor will have the right to enforce the obligations of franchisees who are members of a Market Cooperative to contribute to the Market Cooperative.
- (f) Termination. Franchisor may terminate any Market Cooperative. Any funds left in a Market Cooperative upon termination will be transferred to the Brand Marketing Fee.
- 9.6 Local Advertisement Expenditure. Franchisee shall spend at least 2% of Gross Sales each month on marketing the Business; however, Franchisor reserves the right to require Franchisee to spend at least 3% of Gross Sales each month (the "Local Marketing expenditure"). Upon request of Franchisor, Franchisee shall furnish proof of its compliance with this Section.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, a Market Cooperative is dedicated to administering regional advertising and marketing programs and developing standardized promotional materials for use by its members in local advertising and promotion, subject to Ella Cafe's approval.
The franchisor has the right to attend and participate in any Market Cooperative meeting and any Ella Cafe business owned by the franchisor within the cooperative has the same voting rights as those owned by its franchisees. Each business owner gets one vote per business owned, unless they are in default of their franchise agreement. If the members cannot agree on how to spend the Market Cooperative's funds, Ella Cafe can take over the decision-making after providing 10 days' notice.
The advertising or promotional plans or materials cannot be used by the Market Cooperative or given to its members without Ella Cafe's prior approval. Ella Cafe can also designate the national or regional advertising agencies used by the Market Cooperative. The members of the Market Cooperative determine the dues to be paid, but the dues must be between 1% and 5% of gross sales. Only Ella Cafe has the right to enforce the obligations of franchisees to contribute to the Market Cooperative, and Ella Cafe can terminate any Market Cooperative. Any funds remaining upon termination of a Market Cooperative will be transferred to the Brand Marketing Fee.
This arrangement gives Ella Cafe significant control over regional marketing efforts, ensuring brand consistency and adherence to their standards. Franchisees are required to participate and contribute financially, but they also have a voice in the cooperative's decisions, provided they remain in good standing with their franchise agreement. The ability of Ella Cafe to take over decision-making and terminate the cooperative provides an additional layer of control for the franchisor.