What voting rights do Endless Summer Sweets-owned locations have in regional advertising cooperatives?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
OTHER FEES
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| 6% of your gross | Weekly | See Notes 1 and Note 2. | |
| sales | |||
| 1% of your gross | You are not required at this time to pay us | ||
| sales | an advertising fee or contribute to an | ||
| advertising fund that we administer. | |||
| However, we reserve the right to establish | |||
| a system-wide advertising and marketing | |||
| fund. | |||
| We have the right to establish local or | |||
| regional advertising cooperatives. Any | |||
| location owned by us or any affiliate will | |||
| have the same voting rights as our | |||
| franchisees. Dues will be imposed by a | |||
| majority vote and will not be less than 1% | |||
| of gross sales. |
Source: Item 6 — Other Fees (FDD pages 7–10)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, if the company establishes local or regional advertising cooperatives, any location owned by Endless Summer Sweets or its affiliates will have the same voting rights as its franchisees. This means that company-owned locations will have an equal voice in decisions made by the cooperative, such as the amount and allocation of advertising funds.
The FDD also states that dues will be imposed by a majority vote and will not be less than 1% of gross sales. However, if any location owned by Endless Summer Sweets or its affiliates has a majority vote in the cooperative, the maximum fees imposed will not exceed 3% of gross sales. This provision appears to protect franchisees from potentially excessive fees if the company has significant control over the cooperative.
Currently, Endless Summer Sweets is not requiring franchisees to pay an advertising fee or contribute to an advertising fund administered by them. The company also states that there are no marketing, purchasing, or other cooperatives that currently impose fees on franchisees. However, Endless Summer Sweets reserves the right to establish a system-wide advertising and marketing fund in the future.