How will Auntie Annes allocate franchisee advertising contributions?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
10.3 Advertising Fund.
- A. Contributions to Ad Fund. We will allocate your Advertising Contributions to a fund for the advertising and promotion of the Businesses, the Marks, and the System (the "Ad Fund"). If we operate any Businesses, our Businesses will contribute to the Ad Fund in the same manner as similarly-situated Franchised Businesses. You acknowledge that 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.
- B. Management of Ad Fund. You agree that: (i) we need not maintain the Ad Fund, your Advertising Contributions, or income earned from contributions to the Ad Fund in a separate account from our other funds; (ii) we are not a fiduciary with respect to your Advertising Contributions or the Ad Fund; and (iii) the Ad Fund is not a "trust." We are not required to have an independent audit of the Ad Fund completed. We will provide you with an annual summary of the expenditures of the Ad Fund on your reasonable request. If any monies in the Ad Fund remain at the end of a fiscal year, they will carry-over in the Ad Fund into the next fiscal year. We may treat any amounts that we contribute to the Ad Fund in excess of our required contributions for Businesses that we operate and any spending on advertising that we make in excess of the amounts then available in the Ad Fund as a loan from us to the Ad Fund. We have the right to be reimbursed from the Ad Fund any amounts that we loan to the Ad Fund.
- C. Use of Ad Fund. We will administer the Ad Fund. We have sole authority to direct all advertising programs and promotions and uses of the Ad Fund, with sole control over the creative concepts, materials, and media used in the programs, and the placement and allocation of advertising. We reserve the right to use any media, create any programs, and allocate advertising and promotional expenditures to any regions or locales we deem appropriate. We may
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the company will allocate advertising contributions to a fund used for advertising and promoting the businesses, marks, and the system. If Auntie Annes operates any businesses themselves, those businesses will contribute to the advertising fund in the same manner as other similarly-situated franchised businesses. However, other Auntie Annes franchisees may not be required to contribute to the advertising fund, may contribute at a different rate, or may be required to contribute to a different advertising fund altogether.
The FDD specifies that Auntie Annes is not required to keep the advertising fund separate from its other funds, is not a fiduciary with respect to the advertising contributions, and the advertising fund is not considered a trust. Auntie Annes is not required to have an independent audit of the fund completed, but they will provide an annual summary of the fund's expenditures upon a franchisee's reasonable request. Any remaining funds at the end of the fiscal year will be carried over into the next fiscal year. Auntie Annes can treat contributions exceeding their required contributions as a loan to the advertising fund, which they have the right to be reimbursed for.
Auntie Annes has sole authority to direct all advertising programs, promotions, and uses of the advertising fund, including control over creative concepts, materials, and media used in the programs, as well as the placement and allocation of advertising. They reserve the right to use any media, create any programs, and allocate advertising and promotional expenditures to any regions or locales they deem appropriate. Auntie Annes may use the advertising fund to defray its costs in creating advertising materials and programs.
For a prospective franchisee, this means that while you are required to contribute to the advertising fund, there is no guarantee that the advertising efforts will directly benefit your specific location. Auntie Annes has broad discretion in how the funds are used, and there is limited oversight or specific requirements for how the money is spent. It is important to note that other franchisees may have different contribution requirements, and Auntie Annes' corporate stores contribute in the same manner as other franchisees.