Is the Annex Brands marketing fund audited?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
All retail franchisees and any retail company-owned businesses contribute equally to the fund on a weekly basis. Contributions are 2% of weekly Gross Receipts. We may require you to make payments at an interval as established by us. We will administer the fund. The fund is not audited. We will prepare an unaudited report of the operation of the fund annually within 90-120 days after each fiscal year end, and on your written request, we will make the report available to you. We may use contributions to the fund and associated earnings for soliciting the sale of franchises. Other than reimbursement for reasonable costs and overhead incurred in activities related to the administration or direction of the fund, neither we nor any affiliate will receive any payment for providing products or services to the fund. If we spend more than the contributions accumulated in the fund during any fiscal year, we will have the right to receive, on demand, reimbursement from the fund in later years to the extent of the excess expenditure. If any contributions to the fund, including any associated earnings, are not spent in the fiscal year in which they accrue, they will remain in the fund for use in following years. We reserve the right to terminate the fund at any time, but we will not do so until all monies in the fund have been expended for the purposes described in the franchise agreement.
We are not required to spend any amount from the fund, or any amount from any other source, on marketing, advertising, or promotions in your geographic area. However, under our current Matching Funds Advertising Program (Subsection 10.A of the franchise agreement), your Advertising Association may apply to us for a portion of the fund for use in your geographic area.
In our fiscal year ended September 30, 2024, the retail fund was used for: soliciting the sale of franchises, 4%; production of marketing, advertising and promotional materials, and media
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 45–62)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the system-wide marketing fund is not audited. However, Annex Brands will prepare an unaudited report of the fund's operation annually, within 90 to 120 days after the fiscal year end, which concludes on September 30th. This report will be made available to franchisees upon written request.
Franchisees contribute 2% of their weekly Gross Receipts to the marketing fund, and Annex Brands administers the fund. These contributions, along with any associated earnings, can be used for soliciting the sale of franchises. The FDD specifies that for the fiscal year ended September 30, 2024, the retail fund was allocated as follows: 4% for soliciting the sale of franchises, 14% for production of marketing, advertising and promotional materials, and media placement, 19% for Internet, website and public relations, 25% for administrative expenses, and 38% for the Matching Funds Advertising Program.
While the marketing fund is not audited, franchisees have the right to request and receive an unaudited report detailing the fund's operations. This provides a degree of transparency, allowing franchisees to see how the contributions are being utilized. The lack of an independent audit, however, means that the report's accuracy is not verified by an external party. Prospective franchisees should consider this when evaluating the financial oversight of the marketing fund and may want to discuss the fund's management and performance with existing franchisees.