Can Afuri Ramen Dumpling use Advertising Fees for reasonable salaries related to advertising?
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 company can use advertising fees for reasonable salaries. Specifically, Afuri Ramen Dumpling may use advertising fees for maintaining, administering, researching, and directing advertising and promotional activities. These activities include internet pay-per-click campaigns, social media marketing, television, radio, magazine and newspaper advertising campaigns, and public relations programs and press releases.
In addition to direct advertising costs, Afuri Ramen Dumpling can use advertising fees for marketing research and development, marketing surveys, public relations activities, and the development and maintenance of internet or e-commerce programs. The fees can also cover marketing materials, decor and promotional materials, artwork, advertising services, and training related to marketing, customer service, and sales augmentation.
Furthermore, Afuri Ramen Dumpling may use advertising fees for the production and distribution of periodic newsletters, costs related to custom software applications used by franchisees for customer ordering, and maintaining and updating their website and online portal. The company can also use these fees for maintaining and updating self-order kiosk programs and systems, if any. Importantly, the advertising fees can be used to cover Afuri Ramen Dumpling's reasonable salaries, accounting, collection, legal, and other costs related to all of the aforementioned advertising and promotional activities.
This means that as a franchisee, a portion of the 1% of total revenue paid as an advertising fee could be used to cover the franchisor's internal costs associated with managing and executing advertising campaigns, including employee salaries. This is a common practice in franchising, as it allows the franchisor to maintain a dedicated team focused on marketing and advertising efforts that benefit the entire franchise system.