How is the contribution amount determined for each member of a Hyper Kidz marketing cooperative?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
The members of a Cooperative will determine, by vote, the amount that each member of the Cooperative shall contribute to the Cooperative. Any contributions you make to a Cooperative will count toward your local marketing requirement, but if the amount you contribute to a Cooperative is less than the amount you must spend on local marketing, you must still spend the difference locally. All contributions to the Cooperative will be maintained and administered in accordance with the documents governing the Cooperative, if any. The Cooperative will be operated solely as a conduit for the collection and expenditure of the Cooperative fees for the purposes outlined above. The Cooperative is not required prepare an annual financial statement. Each Hyper Kidz Business has one vote in the Cooperative, except that no franchisee (or commonly controlled group of franchisees) may have more than 25% of the total vote, regardless of the number of Hyper Kidz Businesses owned.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–33)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, the members of a marketing cooperative determine the contribution amount for each member by vote. Each Hyper Kidz business gets one vote, but no franchisee or group of franchisees under common control can have more than 25% of the total vote, regardless of how many Hyper Kidz businesses they own.
Any contributions a franchisee makes to the cooperative count toward their local marketing requirement. However, if the contribution is less than the required local marketing spend, the franchisee must spend the difference locally. All contributions are managed according to the cooperative's governing documents, if any exist.
The cooperative operates solely to collect and spend fees for marketing purposes. It is not required to prepare an annual financial statement. This structure ensures that marketing decisions are made collectively by the franchisees within the cooperative, while also preventing any single franchisee from dominating the decision-making process.