What is the maximum contribution to a Regional Advertising Fund that Afuri Ramen Dumpling can require?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Regional Advertising Cooperative. Subject to our prior written approval, if at any meeting of the franchisees in an advertising region, 75% of the franchisees vote to contribute to a regional advertising program, all franchisees within that region will be obligated to make a contribution to a regional advertising fund in the amount established by the vote. Our company-owned outlets will not be required to participate in or contribute to regional advertising cooperatives. No advertising region may require any franchisee in that region to make a contribution to a Regional Advertising Fund in excess of 2% of that franchisee's Revenue.
Source: Item 6 — Other Fees (FDD pages 11–16)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, franchisees may be required to contribute to a regional advertising fund if 75% of the franchisees in their advertising region vote to do so. However, Afuri Ramen Dumpling specifies that no advertising region can mandate a contribution exceeding 2% of the franchisee's Revenue. This means that while a regional advertising program can be established, the financial burden on each franchisee is capped.
This contribution is in addition to any local advertising and promotion expenses that the franchisee may choose to incur. Company-owned outlets are excluded from participating in or contributing to regional advertising cooperatives. This ensures that the financial obligations for advertising are clearly defined and that franchisees have some control over regional advertising expenditures through their voting rights.
For a prospective Afuri Ramen Dumpling franchisee, this means that while participation in a regional advertising fund is possible, it is not guaranteed, and the maximum financial commitment is limited to 2% of their Revenue. Franchisees should engage with existing franchisees to understand the likelihood and benefits of participating in a regional advertising program. Understanding how the "Revenue" is calculated is also important, as defined in Item 6, it includes all receipts generated by the franchise from any source, with specific inclusions and exclusions, such as sales tax.