How are contributions to the Hyper Kidz marketing cooperative maintained and administered?
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 Hyper Kidz's 2024 Franchise Disclosure Document, if a marketing cooperative is established for a geographic area where a franchisee's Hyper Kidz business is located, the franchisee must become a member. The amount each member contributes is determined by a vote of the cooperative members. These contributions count toward the franchisee's local marketing requirement. However, if the contribution to the cooperative is less than the required local marketing expenditure, the franchisee must spend the difference locally. Each Hyper Kidz business has one vote in the cooperative, but no franchisee (or commonly controlled group) can have more than 25% of the total vote, regardless of how many Hyper Kidz businesses they own.
The contributions to the cooperative are maintained and administered according to the cooperative's governing documents, if any exist. The cooperative operates solely as a conduit for collecting and spending fees for the outlined purposes. The cooperative is not required to prepare an annual financial statement.
This means that Hyper Kidz franchisees will have a say in how marketing funds are spent in their area through the cooperative. However, they must still meet their minimum local marketing expenditure, even if their cooperative contribution doesn't cover the full amount. The absence of a required annual financial statement for the cooperative may limit transparency into the cooperative's finances.