Can Annex Brands terminate the marketing fund?
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's 2025 Franchise Disclosure Document, Annex Brands reserves the right to terminate the system-wide marketing fund at any time. However, Annex Brands is obligated to expend all monies in the fund for the purposes described in the franchise agreement before terminating it.
Annex Brands requires all retail franchisees and company-owned businesses to contribute to the marketing fund weekly, with contributions set at 2% of weekly Gross Receipts. These contributions, along with any associated earnings, are used for various marketing and advertising efforts. According to the document, the fund is not audited, but Annex Brands will prepare an unaudited report of the fund's operation annually, making it available to franchisees upon written request.
For the fiscal year ended September 30, 2024, the retail fund was allocated as follows: 4% for soliciting the sale of franchises, 14% for the 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. This breakdown gives franchisees insight into how their contributions are utilized, although the franchisor has the discretion to change these allocations.