Can Lees Famous Recipe members waive their right to patronage dividends, and if so, how?

According to the 2025 FDD, Lees Famous Recipe AdCom members have the right to waive patronage dividends. Specifically, members can waive these dividends in whole or in part. This waiver must be enacted through action taken at a meeting of the members.

Patronage dividends are distributions of net savings from AdCom to its members, allocated in proportion to their patronage. These dividends are intended to qualify as patronage dividends under the Internal Revenue Code. Generally, AdCom distributes these dividends with 50% in cash and 50% as a written notice of allocation to each member's account. However, the Board can approve different proportions, provided that at least 20% is distributed in cash.

This waiver provision offers flexibility to Lees Famous Recipe franchisees who are AdCom members. For instance, a member might choose to waive their right to dividends to allow AdCom to retain more capital for business purposes or other strategic initiatives. The requirement for the waiver to be decided at a meeting of members ensures that such decisions are made collectively and transparently.