How are contributions to a Local Advertising Cooperative for Extreme Art Studio credited?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.4.2 If we establish a Local Advertising Cooperative in your geographic area pursuant to this Section 9.4, you agree to participate and contribute your share, as determined by the members of the Local Advertising Cooperative, to such Local Advertising Cooperative for each Extreme Art Studio Business that you own that exists within the Local Advertising Cooperative's area. Your contributions to a Local Advertising Cooperative will be credited to your Local Advertising Requirement described in Section 9.2, and payable within five days after the end of the calendar month (or as we designate). Your contributions to a Local Advertising Cooperative may also be capped based on the provisions of the bylaws adopted by the Local Advertising Cooperative, subject to our approval. You will pay these monies to us electronically, and we will remit them periodically to the Local Advertising Cooperative. Extreme Art Studio Businesses owned by us or our affiliates will contribute to their respective Local Advertising Cooperative on the same basis as our franchise owners. Members of the cooperative will be responsible for administering the cooperative, including determining the amount of contributions from each member.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, if a Local Advertising Cooperative is established in a franchisee's area, their contributions to it will be credited towards their Local Advertising Requirement, as detailed in Section 9.2 of the agreement. These contributions are payable within five days after the end of the calendar month, or as otherwise designated by Extreme Art Studio. The bylaws adopted by the Local Advertising Cooperative, subject to Extreme Art Studio's approval, may also cap these contributions. Franchisees are required to electronically pay these funds to Extreme Art Studio, which will then periodically remit them to the Local Advertising Cooperative. Extreme Art Studio businesses owned by the company or its affiliates will contribute to their Local Advertising Cooperative on the same terms as franchisees.
This means that a portion of the franchisee's local advertising spend can be directed through the cooperative, potentially benefiting from group buying power and coordinated campaigns. However, the amount and allocation of these funds are determined by the cooperative members, with Extreme Art Studio's approval, and may be subject to caps. The franchisee must adhere to the payment schedule and method specified by Extreme Art Studio.
It is important to note that while contributions are credited towards the Local Advertising Requirement, the franchisee may not directly benefit in proportion to their contribution. The cooperative has discretion over the creative concepts, materials, and endorsements used, subject to Extreme Art Studio's approval and the availability of funds. The franchisee has one vote on matters involving the activities of the Local Advertising Cooperative. Prospective franchisees should inquire about the existence and operational details of any Local Advertising Cooperative in their area to fully understand the financial and strategic implications.