What Franchise Agreement sections address the advertising obligations for a 360 Painting franchisee?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
ing Fund and its programs (including, without limitation, conducting market research, preparing advertising and promotional materials, collecting and accounting for contributions to the Marketing Fund, paying for the preparation and distribution of financial statements, legal and accounting fees and expenses, taxes, and other reasonable direct and indirect expenses incurred by Franchisor or its authorized representatives in connection with programs funded by the Marketing Fund). The Marketing Fund will not be Franchisor's asset. An unaudited statement of the operations of the Marketing Fund shall
be prepared annually, and shall be made available to Franchisee upon request. Franchisor may spend in any fiscal year more or less than the aggregate contribution of all 360 Painting Businesses to the Marketing Fund in that year, and the Marketing Fund may borrow from Franchisor or others to cover deficits or invest any surplus for future use. Any lender loaning money to the Marketing Fund shall receive interest at a reasonable rate. All interest earned on monies contributed to the Marketing Fund will be used to pay advertising costs before other assets of the Marketing Fund are expended. Franchisor may cause the Marketing Fund to be incorporated or operated through a separate entity at such time as Franchisor may deem appropriate, and such successor entity, if established, will have all rights and duties specified in this Section 11.2. Franchisor will not be liable for any act or omission with respect to the Marketing Fund that is consistent with this Agreement and done in good faith. Except as expressly provided in this Section 11.2, Franchisor assumes no direct or indirect liability or obligation to Franchisee with respect to the maintenance, direction or administration of the Marketing Fund. Franchisee acknowledges and agrees that Franchisor is not operating or acting as a trustee or fiduciary with respect to the Marketing Fund Contributions collected. Franchisee agrees to participate in any promotion, marketing or advertising campaigns created by the Marketing Fund. Franchisor may reduce contributions of franchises to the Marketing Fund and upon notice to Franchisee, reduce the Marketing Fund's operation or terminate the Marketing Fund and distribute unspent monies to those contributing franchisees in proportion to their contributions in the past.
Franchisor may form, at its sole discretion, an advisory board consisting of franchisees of the System (the "Advertising Council") to provide advice and counsel regarding Franchisor's use of Marketing Fund Contributions. Such Advertising Council shall function in an advisory capacity only and shall not exercise any authority over the Marketing Fund or over Franchisor. Franchisee must participate in Advertising Council-related activities and meetings, pay any dues assessed for the administration of that program, and pay Franchisee's own expenses associated with participating in Advertising Council activities. Franchisor will pay its proportionate share of Advertising Council dues based on the number of 360 Painting Businesses it or its affiliates operate.
- 11.2 Local Advertising. Franchisee acknowledges and agrees that to effectively compete within the Protected Territory, Franchisee must undertake and execute an extensive marketing and advertising program designed to promote the Business within the Protected Territory. Therefore, in addition to making contributions to the Marketing Fund, Franchisee shall, at Franchisee's cost and expense, market, advertise and promote the Business in the Protected Territory and shall:
- (i) market, advertise and promote the Business in the Protected Territory only in a manner that will reflect favorably on Franchisor, Franchisee, the services and products offered by Franchisee, and the good name, goodwill and reputation of Franchisor and the Business; and
- (ii) not use any advertising or other marketing or promotional materials furnished by Franchisor or any other materials containing therein, thereon or therewith any of the Marks, for any purpose other than to market and promote the Business. Franchisee shall furthermore not copy or otherwise duplicate any advertising or promotional materials prepared by or for, or furnished by, Franchisor without Franchisor's prior written consent.
In addition to contributions to the Marketing Fund, commencing upon the conclusion of the Grand Opening Period, Franchisee shall spend during the term of this Agreement a minimum of (i) ten percent (10%) of its Gross Sales or (ii) $5,000, whichever is greater, per month on advertising in the Protected Territory (either by way of direct promotion or participation in an Advertising Cooperative, as described in Section 11.4, below). Franchisee shall provide Franchisor with evidence that such monies have been expended in reports as required under Section 6.3 herein. Franchisor retains the right to require that Franchisee's minimum
local advertising expenditure be allocated (as directed by Franchisor) to advertising of certain types, using specific vendors, in particular channels or as a component of a broader campaign.
Franchisee further acknowledges that Franchisor may require that any local marketing or advertising include reference (in a form determined by Franchisor) to one or more franchise systems which may be owned by Franchisor or Franchisor's affiliates; provided that a substantial focus of such materials, programs or activities includes the promotion of the Business.
The total amount of advertising funds expended by Franchisee for individual local market advertising shall be determined by Franchisee, subject to the foregoing minimum requirements.
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 26–27)
What This Means (2025 FDD)
According to the 2025 FDD, several sections within the 360 Painting Franchise Agreement outline the advertising obligations for franchisees. Section 11.2 discusses the Marketing Fund, detailing how contributions are used for advertising materials and services at the national, regional, or local level. Franchisees are required to participate in any promotion, marketing, or advertising campaigns created by the Marketing Fund.
Section 11.4 addresses Cooperative Advertising, where 360 Painting may create programs for franchisees in a particular region. Franchisees are obligated to participate in these programs, and an advertising council may be established to self-administer the program. Franchisee payments to any Advertising Cooperative shall be determined by Franchisee and those other franchisees of the 360 Painting System and/or Franchisor, as the case may be, who are participants in such Advertising Cooperative, as set forth in the by-laws of that Advertising Cooperative or membership, dues, participation or other payment agreements of such Advertising Cooperative. However, franchisees cannot be required to spend more than the greater of $10,000 or 2% of Gross Sales per annum on Cooperative Advertising.
Additionally, Section 11.3 covers Advertising Cooperatives, stating that franchisees must participate in local, regional, or national cooperative advertising groups if required by 360 Painting. The franchisor designates the specific Advertising Cooperative(s) in which franchisees must participate. Amounts paid to an Advertising Cooperative shall be credited against payments Franchisee is otherwise required to make for local advertising as required by Section 11.3 above. Any payments to an Advertising Cooperative shall be in addition to the amounts required to be paid or spent under Sections 11.1 and 11.2 hereof.
These sections collectively define the scope and nature of advertising obligations for 360 Painting franchisees, covering aspects such as participation in marketing funds, cooperative advertising programs, and local advertising efforts. It is important for prospective franchisees to carefully review these sections to understand their financial and participatory responsibilities related to advertising and marketing.