Can Endless Summer Sweets require franchisees to join a purchasing cooperative?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.4 Market Cooperatives. Franchisor 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 thirty (30) days. Franchisor shall not require Franchisee to be a member of more than one Market Cooperative. If Franchisor 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 Franchisor.
Franchisor may require the Market Cooperative to adopt bylaws or regulations prepared by Franchisor.
Unless otherwise specified by Franchisor, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members.
Franchisor will be entitled to attend and participate in any meeting of a Market Cooperative.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets's 2024 Franchise Disclosure Document, franchisees may be required to join a market cooperative under certain conditions. If a Market Cooperative exists for the franchisee's geographic area when they begin operations, they must immediately become a member. If a Market Cooperative is established during the term of the Franchise Agreement for the franchisee's location, the franchisee must join within thirty days. Endless Summer Sweets will not require a franchisee to be a member of more than one Market Cooperative.
The FDD specifies that Endless Summer Sweets determines how each Market Cooperative is organized, governed, and when it commences operations. Endless Summer Sweets may also require the Market Cooperative to adopt bylaws or regulations that they prepare. Unless Endless Summer Sweets specifies otherwise, the activities of each Market Cooperative are decided by a majority vote of its members. Endless Summer Sweets is entitled to attend and participate in any meeting of a Market Cooperative.
This means that as a prospective Endless Summer Sweets franchisee, you may be obligated to participate in a local advertising cooperative if one exists or is created for your area. You should inquire about whether a market cooperative already exists in your target location or if Endless Summer Sweets plans to establish one in the future. Understanding the rules, governance, and costs associated with any Market Cooperative is crucial, as Endless Summer Sweets has significant control over these entities.