Is the Auntie Annes Advertising Contribution in addition to the Local Marketing Obligation?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
Your Advertising Contribution is in addition to your Local Marketing Obligation and your Grand Opening Obligation (as defined below).
We currently do not, and are not required to, maintain the Ad Fund, Advertising Contribution you paid, or income earned from contributions to the Ad Fund in a separate account from our other money. Our Shops will contribute to the Ad Fund in the same manner and in the same amounts as similarly-situated franchised Shops. Our other franchisees may not be required to contribute to the Ad Fund, may be required to contribute to the Ad Fund at a different rate than you, or may be required to contribute to a different advertising fund.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 61–77)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, the Advertising Contribution is indeed in addition to the Local Marketing Obligation and the Grand Opening Obligation. However, the total of the Advertising Contribution and the Local Marketing Obligation will not exceed 5% of Net Sales.
The franchisee is responsible for determining how much to spend on local market advertising to meet the Local Marketing Obligation, but these expenditures must comply with Auntie Anne's requirements. If a franchisee fails to meet the Local Marketing Obligation, Auntie Anne's has the right to spend up to 1% of the Net Sales of the shop on local advertising and will invoice the franchisee for reimbursement. Contributions to an advertising cooperative will be credited toward the Local Marketing Obligation.
Auntie Anne's retains the right to require franchisees to remit all or part of the Local Marketing Obligation to them. In this case, Auntie Anne's has the discretion to allocate these funds to the Ad Fund, national, regional, or local advertising campaigns, advertising cooperatives, or local advertising in the franchisee's market. If Auntie Anne's exercises this right and collects the entire Local Marketing Obligation, the franchisee will not be required to spend a minimum amount on local advertising (excluding the Grand Opening Obligation), provide a local marketing plan, or participate in an advertising cooperative.