Can the Annex Brands marketing fund be used for soliciting the sale of franchises?
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, Annex Brands franchisees agree that the marketing fund may be used for soliciting the sale of franchises. This means that a portion of the money contributed to the fund can be allocated to activities aimed at attracting new franchisees to the Annex Brands system.
In addition to franchise sales, the marketing fund can cover a wide array of expenses related to marketing and public relations. These include the costs associated with creating and distributing marketing materials, managing brand assets, and executing marketing programs across various media platforms such as television, radio, magazines, billboards, print, digital channels, internet, email, and social media. The fund can also be used to hire advertising agencies or suppliers and to provide promotional materials to franchise centers.
The Annex Brands FDD states that the marketing fund will be accounted for separately from the franchisor's other funds and will not be used for general operating expenses, except for reasonable salaries, administrative costs, and overhead related to the fund's administration. An unaudited report on the fund's operation will be prepared annually and made available to franchisees upon written request. Annex Brands may spend more or less than the aggregate contributions to the fund in any given year, with any unspent funds rolling over to the next year. The franchisor will not profit from the marketing fund's programs or administration.