How are contributions to the Hydrodog advertising cooperative determined?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
advisory capacity only and will not have decision making authority. The advisory council would be governed by bylaws. We have the right to establish, change, merge or dissolve any advisory council at any time. We shall also have the right to remove council members in our discretion.
- 12.8 Local Advertising Cooperatives. We may, in our discretion, create a regional advertising cooperative ("Cooperative") in any area where two or more HydroDog Businesses are located, and establish the rules and regulations therefor. Immediately upon our request, you must become a member of the Cooperative for the area in which your HydroDog Business is located. In no event may the HydroDog Business be required to be a member of more than one Cooperative. The Cooperative must be governed in the manner we prescribe. You shall make contributions to the Cooperative in such amounts at the times and in the manner as determined by majority vote of the Cooperative members, subject to our approval. Any amounts that you contribute to a Cooperative will count toward your Local Advertising requirement, but if the amount you contribute to a Cooperative is less than the amount you must spend on Local Advertising you must spend the difference locally. The following provisions apply to each Cooperative:
- (a) The Cooperative must be organized and governed in a form and manner, and commence operation on a date that we approve in advance in writing;
- (b) the Cooperative must be organized for the exclusive purpose of administering marketing programs; developing, subject to our approval, standardized promotional materials for the members' use in Local Advertising within the Cooperative's area;
- (c) the Cooperative may adopt its own rules and procedures, but such rules or procedures must be approved by us and must not restrict or expand your rights or obligations under this Agreement;
- (d) except as otherwise provided in this Agreement, and subject to our approval, any lawful action of the Cooperative at a meeting attended by members possessing more than fifty percent (50%) of the total voting power in the Cooperative is binding upon you if approved by members possessing more than fifty percent (50%) of the total voting power possessed by members in attendance, with each franchised business having one vote (including businesses we own that exist within the Cooperative's area), but no franchisee (or commonly controlled group of franchisees) may have more than twenty-five percent (25%) of the vote in the Cooperative regardless of the number of franchised businesses owned;
- (e) without our prior written approval, the Cooperative may not use, nor furnish to its members, any marketing or promotional plans or materials; all such plans and materials must be submitted to us for our approval in accordance with the procedure set forth in Section 9.4;
- (f) no later than the 15th day of each month, each member/franchisee must submit its contribution to the Cooperative, together with such other statements or reports as we or the Cooperative may require, with our prior written approval;
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, if a regional advertising cooperative is established, franchisees must join if requested by Hydrodog. The amount franchisees contribute to the Cooperative, the timing, and the manner of contribution are determined by a majority vote of the Cooperative members, but this is subject to Hydrodog's approval.
Franchisees' contributions to the Cooperative count toward their local advertising requirements. However, if the contribution to the Cooperative is less than the required local advertising spend, the franchisee must spend the difference locally. The Cooperative is governed in a manner prescribed by Hydrodog and must be organized and operated in a form and manner approved by Hydrodog in writing.
The Cooperative can adopt its own rules and procedures, but Hydrodog must approve them, and they cannot restrict or expand the franchisee's rights or obligations under the Franchise Agreement. Generally, any lawful action of the Cooperative is binding if approved by members holding more than 50% of the total voting power, with each franchised business having one vote. However, no franchisee can have more than 25% of the vote, regardless of how many franchised businesses they own. Franchisees must submit their contributions to the Cooperative by the 15th of each month, along with any required statements or reports, subject to Hydrodog's prior written approval.
If the Cooperative members cannot resolve an issue affecting the Cooperative's establishment or functioning within 45 days, Hydrodog's resolution of the issue is final and binding on all members. This structure gives Hydrodog significant control over the advertising cooperative, even though the franchisees vote on contribution amounts. Prospective franchisees should be aware that while they have a vote, Hydrodog has final approval and can resolve impasses, potentially influencing advertising strategies and expenditures.