What costs can the Annex Brands marketing fund be used to cover?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee.
Franchisee agrees that the Fund may be used to meet any and all costs of maintaining, administering, directing, developing and preparing national, regional or local marketing materials, brand and marketing assets, programs, and public relations activities, including the costs of preparing and conducting television, radio, magazine, billboard, print or digital, Internet, email marketing programs, social media platforms, online directory listings, other networking platforms, and other media programs and activities, the costs of employing advertising agencies or suppliers to assist therewith, and the cost of providing promotional posters or brochures, print or digital marketing materials, and other sales aids to Centers. Franchisee also agrees that the fund may be used for soliciting the sale of franchises.
The Fund will be accounted for separately from other funds of Franchisor and will not be used to defray any of Franchisor's general operating expenses, except such reasonable salaries, administrative costs, and overhead as Franchisor may incur in activities related to the administration or direction of the Fund and its programs (including conducting market research, preparing marketing materials or brand and marketing assets, and collecting and accounting for contributions to the Fund). An unaudited report of the operation of the Fund will be prepared annually by Franchisor within 90-120 days after each fiscal year end, and will be made available to Franchisee on written request. Franchisor may spend in any fiscal year an amount greater or less than the aggregate contributions of Centers to the Fund in that year. If less than the aggregate contribution amount is spent in 1 year, then the remainder will roll over to the next year. There will be no markup or profit to Franchisor from marketing, promotional programs or the collection and administration of the Fund.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 FDD, the Annex Brands marketing fund can be used for a wide array of marketing and public relations activities. These include the creation, maintenance, and administration of marketing materials at the national, regional, and local levels. This encompasses traditional media such as television, radio, magazines, and billboards, as well as modern digital strategies including internet, email marketing, social media platforms, and online directory listings. The fund can also cover the costs of hiring advertising agencies or suppliers to assist with these efforts. Promotional materials like posters, brochures, and other sales aids for the Centers are also covered. Soliciting the sale of franchises is another permissible use of the marketing fund.
Annex Brands ensures that the marketing fund is kept separate from the company's general operating funds. However, the FDD specifies that reasonable salaries, administrative costs, and overhead incurred by Annex Brands in managing the fund and its programs are allowable expenses. This includes activities such as market research, preparing marketing materials, and managing the collection and accounting of fund contributions.
An unaudited report detailing the operation of the fund will be prepared annually by Annex Brands within 90 to 120 days after the fiscal year end. This report is available to franchisees upon written request, providing transparency in how the marketing funds are being utilized. The FDD also states that Annex Brands has the flexibility to spend more or less than the aggregate contributions from Centers in any given fiscal year, with any unspent funds rolling over to the next year. Importantly, Annex Brands will not profit from the marketing or promotional programs, or from the collection and administration of the fund, ensuring that the contributions are used solely for the intended marketing purposes.