How are the monies collected on behalf of a Local Advertising Cooperative for Extreme Art Studio accounted for?

According to the 2024 Extreme Art Studio Franchise Disclosure Document, monies collected on behalf of a Local Advertising Cooperative are kept separate from Extreme Art Studio's other funds and will not be used to cover the company's general operating expenses. Franchisees are required to submit any reports requested by Extreme Art Studio or the Local Advertising Cooperative. Each cooperative must prepare annual unaudited financial statements, which will be available for review by each member of the cooperative.

Extreme Art Studio, or its affiliates or designees, may establish a Local Advertising Cooperative in geographical areas where two or more Extreme Art Studio Businesses operate. If a Local Advertising Cooperative is established in the franchisee's area, the franchisee must participate and contribute their share, as determined by the members of the Local Advertising Cooperative. These contributions are credited towards the franchisee's Local Advertising Requirement and are payable within five days after the end of the calendar month. Franchisees pay these monies to Extreme Art Studio electronically, and Extreme Art Studio remits them periodically to the Local Advertising Cooperative.

Each Extreme Art Studio Business contributing to a Local Advertising Cooperative has one vote on matters involving the activities of the particular Local Advertising Cooperative. The Local Advertising Cooperative may not use any advertising, marketing, or promotional plans or materials without Extreme Art Studio's prior written consent. 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 assessments may be used to pay for preparing and producing advertising materials, purchasing media advertising, implementing direct sales programs, and employing marketing firms.

Extreme Art Studio retains the right, but not the obligation, to use collection agents and to institute legal proceedings to collect amounts owed to the Local Advertising Cooperative on behalf of and at the expense of the Local Advertising Cooperative and to forgive, waive, settle and compromise all claims by or against the Local Advertising Cooperative. However, Extreme Art Studio assumes no direct or indirect liability or obligation to franchisees with respect to the maintenance, direction, or administration of the Local Advertising Cooperative.