What is the purpose of an Ella Cafe Market Cooperative?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
ll 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, 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. Franchisor has the sole discretion to determine what activities constitute "marketing" under this Section. Franchisor may, in its discretion, determine that if Franchisee contributes to a Market Cooperative, the amount of the contribution will be counted towards Franchisee's required spending under this Section.
- 9.7 Market Introduction Program. Franchisee shall develop a grand opening advertisement plan and obtain Franchisor's approval of the plan at least 60 days before the projected Opening Date of the Franchised Business.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the purpose of a Market Cooperative is to administer regional advertising and marketing programs and develop standardized promotional materials for use by its members in local advertising and promotion. However, all advertising or promotional plans or materials must receive prior approval from Ella Cafe. Ella Cafe may also designate the national or regional advertising agencies used by the Market Cooperative.
Ella Cafe franchisees are required to join a Market Cooperative if one exists for their geographic area, becoming a member immediately if it exists when they start operating or within 30 days if established later. Franchisees cannot be required to be in more than one Market Cooperative. The Market Cooperative determines its dues through a majority vote, with the dues ranging from 1% to 5% of gross sales.
Ella Cafe retains significant control over the Market Cooperative, including the right to attend meetings, having the same voting rights as franchisees for company-owned locations, and the ability to assume decision-making authority if the members cannot agree on how to spend the Market Cooperative's funds. Ella Cafe also has the sole right to enforce the obligations of franchisees to contribute to the Market Cooperative and can terminate any Market Cooperative. If a Market Cooperative is terminated, any remaining funds are transferred to the Brand Marketing Fee.