Can Endless Summer Sweets terminate a Market Cooperative?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
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 the 2024 Endless Summer Sweets FDD, Endless Summer Sweets has broad authority over Market Cooperatives. The FDD states that Endless Summer Sweets determines the form, manner, and start date of operations for any Market Cooperative. Endless Summer Sweets can also require the Market Cooperative to adopt bylaws or regulations that Endless Summer Sweets prepares.
While the document does not explicitly state that Endless Summer Sweets can terminate a Market Cooperative, the extensive control Endless Summer Sweets exerts over the Market Cooperative strongly suggests that it can effectively terminate a cooperative by altering its governance, bylaws, or regulations to the point where it ceases to function as intended. The FDD specifies that activities carried on by each Market Cooperative are decided by a majority vote of its members, unless otherwise specified by Endless Summer Sweets. This implies that Endless Summer Sweets can override the decisions of the members.
Prospective franchisees should note that membership in a Market Cooperative is mandatory if one exists in their area, or if one is established during the term of their Franchise Agreement. However, Endless Summer Sweets will not require a franchisee to be a member of more than one Market Cooperative. Given the level of control Endless Summer Sweets retains over these cooperatives, franchisees should seek clarification from Endless Summer Sweets regarding the specific conditions under which a Market Cooperative might be altered or effectively terminated, and what recourse, if any, franchisees have in such a situation.
It is important for potential franchisees to fully understand the implications of Market Cooperative membership, including the financial obligations and the extent to which they can influence the cooperative's activities, considering Endless Summer Sweets's overarching authority.