Can the Advertising Fees paid by Afuri Ramen Dumpling franchisees be used for salaries?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
We may use all contributions and any earnings from the Advertising Fees we receive from you in local, regional, national, Internet, or international advertising for:
A. maintaining, administering, researching, directing, preparing, and placing advertising and promotional activities (including, among other things, the costs of preparing and conducting internet pay-per-click campaigns; social media marketing; television; radio; magazine and newspaper advertising campaigns; public relations programs and press releases);
B. marketing research and development;
C. marketing surveys and public relations activities;
D. development and maintenance of any Internet or e-commerce programs;
E. marketing materials;
F. decor and promotional materials;
G. artwork;
H. advertising services;
I. training related to marketing, customer service and sales augmentation;
J. production and distribution of periodic newsletters to provide you with industry news, suggestions, and advice on franchise operations;
K. our costs related to our custom or proprietary software application used by our franchisees for customer ordering;
L. maintaining and updating our website;
M. maintaining and updating our online portal (used to share updates and information regarding recipes, menu items, and related information with our franchisees);
N. maintaining and updating the self-order kiosk programs and systems (if any); and
O. our reasonable salaries, accounting, collection, legal and other costs related to all of the above.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, the Advertising Fees can be used to cover the franchisor's reasonable salaries. Specifically, Afuri Ramen Dumpling may use the Advertising Fees it receives from franchisees for local, regional, national, Internet, or international advertising.
The FDD outlines several specific uses for these fees, including maintaining and administering advertising activities, marketing research and development, marketing surveys and public relations, development and maintenance of internet programs, marketing materials, decor and promotional materials, artwork, advertising services, and training related to marketing. Additionally, the fees can be used for the production and distribution of newsletters, costs related to custom software applications, website maintenance, online portal maintenance, and self-order kiosk programs.
Importantly, Afuri Ramen Dumpling states that the Advertising Fees can be used for their "reasonable salaries, accounting, collection, legal and other costs related to all of the above." This means that a portion of the 1% of total revenue that franchisees pay as an Advertising Fee may be allocated to the franchisor's salaries, provided those salaries are related to the advertising and marketing activities listed.