Are Mr. Sandless advertising cooperatives required to prepare annual or periodic financial statements?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
There are presently no advertising councils or local or regional advertising cooperatives. If an advertising cooperative is formed by our franchisees and approved by us, you must agree to contribute to the cooperative the amount agreed upon by a majority of the members of the cooperative, to pay that amount to the advertising cooperative and the times agreed upon by the majority, and abide by the cooperative's rules. The cooperative will determine who will administer the cooperative. The written governing documents will be available for review by you. Cooperatives need not prepare annual or periodic financial statements, but if they are prepared, they may be reviewed by you. We will not have the power to require cooperatives to be formed, changed, dissolved or merged.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 19–25)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, advertising cooperatives formed by franchisees are not required to prepare annual or periodic financial statements. However, if these statements are prepared, they are available for review by franchisees. This means that while Mr. Sandless franchisees may participate in local advertising cooperatives, these cooperatives are not mandated to provide regular financial reports.
This lack of mandatory financial statements could present both benefits and risks for franchisees. On the one hand, it reduces the administrative burden on the cooperative. On the other hand, it means franchisees need to be more proactive in monitoring the cooperative's financial activities if they want to ensure funds are being managed effectively. The FDD states that the written governing documents of the cooperative will be available for franchisee review.
Mr. Sandless does not have the power to require cooperatives to be formed, changed, dissolved, or merged, giving franchisees more control over these entities. However, if a cooperative is formed and approved by Mr. Sandless, franchisees must contribute the amount agreed upon by a majority of the members and abide by the cooperative's rules. This highlights the importance of active participation in cooperative decision-making to ensure that the terms are agreeable to all members.
Prospective Mr. Sandless franchisees should inquire about the financial practices and governing documents of any existing or planned advertising cooperatives to fully understand their rights and obligations. Understanding how these cooperatives operate and how funds are managed will be crucial for making informed decisions about participation and investment.