What is the definition of 'Market Cooperative' in the Fly To Fit FDD?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.4 Market Cooperatives. Fly To Fit Franchise 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 30 days.
Fly To Fit Franchise shall not require Franchisee to be a member of more than one Market Cooperative.
If Fly To Fit Franchise 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 Fly To Fit Franchise.
Fly To Fit Franchise may require the Market Cooperative to adopt bylaws or regulations prepared by Fly To Fit Franchise.
Unless otherwise specified by Fly To Fit Franchise, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members.
Fly To Fit Franchise will be entitled to attend and participate in any meeting of a Market Cooperative.
Any Fly To Fit business owned by Fly To Fit Franchise in the Market Cooperative shall have the same voting rights as those owned by its franchisees.
Each Business owner will be entitled to cast one vote for each Business owned, provided, however, that a franchisee shall not be entitled to vote if it is in default under its franchise agreement.
If the members of a Market Cooperative are unable or fail to determine the manner in which Market Cooperative monies will be spent, Fly To Fit Franchise may assume this decision-making authority after 10 days' notice to the members of the Market Cooperative.
- (b) Purpose.
Each Market Cooperative shall be devoted exclusively to administering regional advertising and marketing programs and developing (subject to Fly To Fit Franchise's approval) standardized promotional materials for use by the members in local advertising and promotion.
- (c) Approval.
No advertising or promotional plans or materials may be used by a Market Cooperative or furnished to its members without the prior approval of Fly To Fit Franchise pursuant to Section 9.1.
Fly To Fit Franchise may designate the national or regional advertising agencies used by the Market Cooperative.
- (d) Funding. The majority vote of the Market Cooperative will determine the dues to be paid by members of the Market Cooperative, including Franchisee, but not less than 1% and not more than 5% of Gross Sales.
- (e) Enforcement. Only Fly To Fit Franchise will have the right to enforce the obligations of franchisees who are members of a Market Cooperative to contribute to the Market Cooperative.
- (f) Termination. Fly To Fit Franchise may terminate any Market Cooperative. Any funds left in a Market Cooperative upon termination will be transferred to the Marketing Fund.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, a Market Cooperative is defined as a market advertising and promotional cooperative fund that Fly To Fit may establish in any geographical area. If a Market Cooperative exists for the franchisee's location when they start operating, they must immediately join. If one is created later, the franchisee has 30 days to become a member. Fly To Fit will not require franchisees to be part of more than one Market Cooperative.
Fly To Fit determines the organization, governance, and start date of each Market Cooperative and may require the cooperative to adopt bylaws or regulations they prepare. Unless Fly To Fit specifies otherwise, the activities are decided by a majority vote of the members, with Fly To Fit having the right to attend and participate in meetings, including having the same voting rights as franchisees for any Fly To Fit businesses in the cooperative. Each business gets one vote, but a franchisee in default under their agreement cannot vote. If the members can't decide how to spend the money, Fly To Fit can take over the decision-making after giving 10 days' notice.
The purpose of each Market Cooperative is to manage regional advertising and marketing programs and to develop standardized promotional materials for local advertising and promotion, subject to Fly To Fit's approval. No advertising or promotional plans or materials can be used without Fly To Fit's prior approval, and Fly To Fit can designate the national or regional advertising agencies used by the Market Cooperative. The majority vote of the Market Cooperative determines the dues to be paid by members, including the franchisee, which must be between 1% and 5% of Gross Sales. Fly To Fit is the only party that can enforce the obligations of franchisees to contribute to the Market Cooperative. Fly To Fit can terminate any Market Cooperative, and any remaining funds will be transferred to the Marketing Fund.
Franchisees are required to spend at least 5% of Gross Sales each month on marketing the Business, and Fly To Fit has the discretion to determine what activities constitute "marketing" under this requirement. Fly To Fit may determine that contributions to a Market Cooperative count toward this required spending. This structure gives Fly To Fit significant control over marketing and advertising efforts, while also requiring franchisees to contribute financially to these efforts, either directly or through the Market Cooperative.