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Blog: What Is A Cooperative?

December 30, 2014

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While a “coop” is a house for chickens, a “co-op” is an abbreviation for cooperative, a special form of business entity owned and controlled by its member-patrons rather than outside investors.  The member-patrons elect a board of directors that run the co-op.  The distribution of earnings to the member-patrons is correlated to the amount of business the member-patron does with the co-op.  These distributions are called “patronage refunds.”  Co-ops are common in the agricultural industry, but can be found in a variety of other sectors.  Forming a co-op can be a way for member-patrons to increase their bargaining power, reduce their costs, and maximize their income.

This blog post is authored by Allyson Dirksen and meant for informational purposes only.  It is not meant to provide legal advice in any particular circumstance or factual situation.  You should consult with an attorney prior to taking any action regarding the information contained herein. 

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