FREQUENTLY ASKED QUESTIONS
What is a Food Co‑op?
A food co-op is a community owned grocery store that exists to serve its owners, and through them, serve its community. Cooperatives (co-ops) are typically formed in communities to address unmet needs of its residents. For food co-ops, this can mean supporting local farmers & producers, making organic food more available and affordable, and building a stronger local, cooperative economy. The food co-op business model allows owners to work collectively to meet this need, rather than individuals trying to accomplish it themselves or rely on traditional businesses. In Minnesota, food co-ops are regulated under MN Statutes 308A & 308B which lay out the legal requirements of how food co-ops are formed and operated. View these videos for more information: https://www.freerangefood.coop/what-is-a-food-co-op
How much does it cost, and why do I have to pay to become an owner?
Your ownership fee is an investment to help the co-op fund the beginning stages of development. The ownership fee is $100.00, which includes 1 Class A stock, entitling you to voting rights. The remaining $75.00 are three non-voting Class B shares, which all owners are required to purchase. This ensures committed ownership and makes all owners equal. One owner = One vote. There are no annual fees. Additional owner investments will be needed to help fund buildout once a site is selected to cover store design costs, construction fees, equipment and inventory to purchase.
What if I can’t pay the whole $100 up front?
The $100.00 fee can be divided into two payments of $50.00 or four payments of $25.00. The minimum first payment is $25.00, to purchase the Class A share. Invoices for remaining payments are sent monthly. However, the owner’s voting rights are not activated until the total ownership fee is paid.
Why should I become an owner now, and what will my investment be used for?
More owners means more support! The development of the co-op is community and owner driven, meaning the co-op needs to build a strong ownership foundation during development in order to be successful once it’s open. For instance, if we have 1,200 owners when the store opens, we can safely assume a large majority of those owners will shop regularly at the co-op for their grocery needs. Commercial lenders will also be more likely to provide the funding we need with strong owner numbers and support.
During development, your investment is used for expenses such as market and financial feasibility studies, community outreach costs, training for the board and volunteers, printing and advertising, accounting and attorney fees, matching grant funds, etc.
When will the store open?
Many factors determine when our co-op will open such as:
Recruiting a strong board and core group of owner-volunteers
Finding a suitable location for our co-op
Raising enough funds during the Community Investment Campaign
Building ownership to a level indicating strong community support for the co-op
Our Development Timeline lays out guidelines for ownership goals and tasks to be completed during each of the 5 development stages before moving on to the next. Most modern food co-ops take 8 - 10 years to open. We are currently in the third development stage (stage “2B”) and are preparing the capital campaign plan and working on site selection before moving on to stage 3A.
What still needs to be done?
A lot!
Growing ownership to at least 1,200 owners, selecting a suitable site for the co-op, lease or purchase negotiations, completing a business plan, hiring a general manager, running a capital campaign, store renovation or building, and many other tasks related to opening the store. The completion of these tasks depends on healthy organizational systems, a strong board of directors, and an engaged team of owner-volunteers.
WE NEED YOU!
What can I do to help?
There are many ways you can help FRFC grow into a thriving food co-op! We are actively looking to fill volunteer roles. Chances are good you’ll find a role to fit your skills, interests and availability; check out our Volunteer page and complete the survey to tell us how you will help!
Where will the co‑op be located?
A site has yet to be determined but our Site Selection Team is actively engaged in this task! Our professional market study provided recommendations for geographic location and other considerations for the physical store and the team is working hard to find the best possible site based on these recommendations. If you have time and talents related to commercial real estate or site development, please reach out to brandono.frfc@gmail.com.
How will the money be raised to open the store?
Because co-ops are owned by community members, a large portion of the funding will come from owners during the Community Investment Campaign. The Campaign is being planned with help from experienced professional Katie Novak Cooperative Coaching, and will provide owners with multiple options for investing in the building of our physical store. Owners will not be asked to fund the whole project, but in order for commercial lenders to also invest in our cooperative they will need to see owners investing in it first. Lenders will expect us to raise a significant amount of money from our own community before helping us fund the remainder of the project.
Leading up to the Community Investment Campaign, we are working to find and secure our site in order to assess build costs based on the selected location. We will also have a better understanding of other available grants or loans so we can calculate how much we need to raise in owner capital during the Campaign. The total amount of money needed is very site-dependent but is expected to be at least $2 million.
How will FRFC be different from other grocery stores?
FRFC will be more than a grocery store: it will be a community-owned business providing convenient access to fresh, local, organic, healthy and whole foods and products while also providing opportunities for education and continued learning for community members. It will be a leader in sustainable business practices and environmental stewardship while driving increased investment and positive development in our community.
Independently owned grocery stores exist to earn a profit for just a few owners and major shareholders. Cooperatives exist to serve their owners. Free Range Food Co-op will not be solely profit-driven. A well-run co-op needs to be able to earn a modest profit in order to invest in the growth of the business to better serve its owners, to invest in the community or to take other actions consistent with its mission. Because our co-op will be owned and overseen by people living in our community, all profits and resources will remain here in Itasca County to generate economic and social value to you and your fellow owners and community members.
One of the most notable differences which will set apart our co-op grocery store is the amount of food and goods purchased directly from local and regional growers and producers. Cooperatives offer an average of 22% local foods and goods compared to the conventional grocery store average of only 6%. Commitment to the local economy is part of our vision and will be built into the operations once the co-op opens. Most food co-ops already do this, so we are learning from them how to make this a successful business to get local food on the shelves of our co-op!
How will the co-op be able to compete with other grocery stores in Grand Rapids?
As a food co-op, we do not have to accommodate a corporate office or shareholders demanding maximum profitability. The co-op’s commitment is to its owners. Owner involvement is the foundation of decisions made for the co-op, with the intention to provide fair pricing and fair return on investments. Free Range Food Co-op will compete through our ability to stock locally grown and produced products while helping stimulate local agriculture, reducing the cost and impact of long distance shipping, and keeping money in our local economy. FRFC will emphasize naturally produced and organic products to provide healthier, more nutrient dense foods. Through our strong community-centered mission, vision, and cooperative principles, FRFC will bring value to the residents of Itasca County beyond our grocery offerings.
Can the co-op be financially successful?
As of 2021, our mentor organization Food Co-op Initiative had helped open 167 food co-ops in their 15 years of work and 63% of them are still in business. In addition, a professional market study conducted for FRFC indicated there is sufficient sales potential to support a full-service natural foods co-op in Grand Rapids. The co-op’s vision includes having the ability to generate enough of a profit to provide additional services to its owners and the community. Future decisions regarding how profits are allocated will be decided through the board of directors based on input from owners. Some of these actions may include enhancement of the services offered in the store, expansion of the store, reduction of prices, increased dividends for owners, increased employee wages or investment in community projects.
Will I have to be an owner to shop at the co‑op?
No. Everyone will be welcome to shop at the co-op! Whether you are an owner or not, you can expect the same exceptional customer service and quality products. However, owners will receive the additional benefit of voting rights as well as possible discounts and patronage dividends during profitable years once the co-op is open.
What will happen to my investment if the co‑op doesn't open?
As with any investment, your ownership share and subsequent investments are subject to risk. If the co-op is unsuccessful, the board of directors will determine distribution of remaining assets. In this unlikely event, every effort will be made to refund the paid portion of your equity share.
Is this a buying club or a CSA?
No. The food co-op will be a physical grocery store located in Grand Rapids where you can go in and shop for groceries and goods just like any other grocery store!
Will I have to volunteer in the store if I join?
No! Owners will not be expected to staff the store on a volunteer basis. However, it is critical that owners are willing to volunteer now during the development stage so we can keep our momentum going and have enough hands to get the work done prior to opening. As we get further along in the development process a General Manager will be hired, followed by paid employees.
Does the food co‑op board get paid?
No. The current by-laws state that the board of directors for Free Range Food Co-op is unpaid. The board is responsible for monitoring operations and meeting the mission and vision goals of the co-op on behalf of its owners. Our board is made up of co-op owners, elected by other co-op owners! This democratic approach to business results in a powerful economic force benefiting the co-op, its owners, and the community it serves.
Is a food co‑op a nonprofit?
No. A food co-op is a for-profit, cooperatively owned business. Cooperatives are a specific type of business regulated under MN Statute 308A & 308B, which requires the co-op to have a board of directors, among other legal obligations. The co-op will have to be profitable as a cooperative grocery store in order to be successful in serving the community.
Are you applying for grants to help get the food co‑op open?
Yes. We have already received a number of grants totaling over $22,000 from organizations like the Blandin Foundation, Lake Country Power, Food Co-op Initiative, and more. These grants have helped us manage the many expenses involved with building the co-op. We will continue to apply for grants as opportunities become available. If you know of grant opportunities, have grant writing experience or interest and are willing to lend your talents to the development of YOUR co-op, please reach out to us at freerangefoodcoop@gmail.com.