If a Mr. Sandless advertising cooperative prepares financial statements, can franchisees review them?
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, if an advertising cooperative is formed by Mr. Sandless franchisees and approved by the franchisor, franchisees must contribute to the cooperative as agreed upon by a majority of its members and abide by its rules. The cooperative determines its own administrator.
The governing documents of the cooperative will be available for franchisee review. While the cooperatives are not required to prepare annual or periodic financial statements, if they do prepare them, franchisees are allowed to review them.
Mr. Sandless does not have the power to mandate the formation, changes, dissolution, or merging of these cooperatives. This indicates that while franchisees must participate in approved cooperatives, the franchisor maintains a hands-off approach regarding their financial operations and structure, leaving those decisions to the franchisees involved.