How will the Advertising Contribution be collected from an Auntie Annes franchisee in a co-branded location, and what determines the portion of Net Sales used for calculation?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
The Advertising Contribution shall be in an amount we determine, in our sole discretion, which when combined with the Local Marketing Obligation (as specified in Section 10.1.E. (Local Marketing Obligation)) shall not exceed 5% of the Net Sales of the Franchised Business, payable each week on the Net Sales of the Franchised Business for the preceding week (or on any other basis stated in the Manuals or in our written notice to you). We will collect the Advertising Contribution from you based on the portion of the Net Sales of the Franchised Business that are attributable to products that we and the Co-Branded Franchisor mutually agree, in our and its sole discretion, to credit towards the Auntie Anne's® side of the Franchised Business. Pursuant to the Co-Branded Agreement, the Co-Branded Franchisor will collect an advertising contribution from you based on the remaining portion of the Net Sales of the Franchised Business that are attributable to products that we and the Co-Branded Franchisor mutually agree, in our and its sole discretion, to credit towards the Co-Branded Franchise's side of the Franchised Business.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, the Advertising Contribution for a co-branded location is determined by an agreement between Auntie Anne's and the Co-Branded Franchisor. The amount is determined at their discretion, and when combined with the Local Marketing Obligation, it cannot exceed 5% of the Net Sales of the Franchised Business. This contribution is paid weekly based on the Net Sales of the preceding week, or on another basis as specified in the manuals or written notice.
Auntie Anne's will collect the Advertising Contribution based on the portion of Net Sales attributable to products that both Auntie Anne's and the Co-Branded Franchisor mutually agree to credit towards the Auntie Anne's side of the business. The Co-Branded Franchisor will collect an advertising contribution from the franchisee based on the remaining portion of Net Sales attributable to products credited towards the Co-Branded Franchise's side of the business.
This arrangement means that franchisees need to understand how Net Sales are allocated between the two brands, as this directly impacts how much they pay to each franchisor for advertising. The agreement between Auntie Anne's and the co-branded franchisor is a critical factor, and franchisees should seek clarity on how this agreement is structured and how it might affect their overall advertising expenses.