For what exclusive purposes are Hyper Kidz marketing cooperatives organized?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
We may designate any geographic area in which two or more Hyper Kidz Businesses are located as an area for purposes of establishing a marketing cooperative ("Cooperative"), or we may approve of the formation of a Cooperative by our franchisees. The members of the Cooperative for any area will consist of all franchised Hyper Kidz Businesses; Hyper Kidz Businesses operated by us or our affiliates may, but are not required to, participate in a Cooperative. We have the right to form, dissolve, merge or change the structure of the Cooperatives. Each Cooperative will be organized for the exclusive purposes of administering marketing programs for Cooperative members and developing, subject to our approval as described above, promotional materials for use by the members in local marketing. If a Cooperative has been established for a geographic area where your Hyper Kidz Business is located when the Franchise Agreement is signed, or if any Cooperative is established during the term of the Franchise Agreement, you must become a member of the Cooperative. You will not have to participate in more than one Cooperative. If the Cooperative will operate according to written documents, we must approve of these documents, and a copy of the Cooperative documents applicable to the geographic area in which your Hyper Kidz Business will be located will be provided to you if you request them.
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, marketing cooperatives are established either by Hyper Kidz or approved for formation by franchisees in geographic areas with two or more Hyper Kidz businesses. These cooperatives are organized specifically to manage marketing programs for their members and to develop promotional materials for local marketing, subject to Hyper Kidz's approval.
If a cooperative exists in the franchisee's area, membership is mandatory. Franchisees are limited to participating in only one cooperative. The cooperative's operational documents require Hyper Kidz's approval, and franchisees can request a copy of these documents.
The members of the Cooperative determine contribution amounts, and these contributions count toward the franchisee's local marketing requirements. However, if the contribution is less than the required local marketing expenditure (2% of Gross Sales each month for local marketing and promotion), the franchisee must cover the difference. The cooperative functions solely to collect and spend fees for the outlined marketing purposes and is not required to prepare annual financial statements. Each Hyper Kidz business has one vote, but no franchisee can hold more than 25% of the total vote, regardless of the number of businesses they own.