What is the 'Grand Opening Obligation' for an Auntie Annes franchise, and where is the specific amount detailed?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
C. Grand Opening Advertising.
- (i) Grand Opening Obligation. You must spend at least the amount specified in Schedule A on grand opening advertising promoting the opening of your Franchised Business within the time period specified in Schedule A (the "Grand Opening Obligation"). Alternatively, we may, in our sole discretion, require you to pay the Grand Opening Obligation to us or the Ad Fund for us to spend in accordance with a grand opening advertising plan that we designate or approve. The Grand Opening Obligation is in addition to your Advertising Contribution and any local advertising obligations you may have. If you relocate the Franchised Business pursuant to Section 5.5 (Relocation of the Franchised Business), we may require you to comply with the Grand Opening Obligation again.
- (ii) Conducting Grand Opening. If we require you to conduct the grand opening advertising, you must (a) obtain our written approval for your grand opening advertising plan at least 30 days prior to the scheduled start date of such advertising campaign and (b) implement the grand opening advertising plan that we approve or designate (which may be different from what you propose), using only Advertising and Promotional Content and related media that we have approved. We have the right to require you to provide documentation that demonstrates your compliance with the Grand Opening Obligation. If you fail to make advertising expenditures in accordance with this Section 10.1.C., we will have the right to either: (1) require you to spend the remaining amount on local marketing advertising, in addition to your Local Marketing Obligation, or (2) spend an amount not to exceed your Grand Opening Obligation on promoting the opening of your Franchised Business for you, in which case you must reimburse us for these expenses.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, franchisees must spend a minimum amount on grand opening advertising to promote their new business. This amount and the specific timeframe to spend it are detailed in Schedule A of the Franchise Agreement, which is incorporated by reference into the agreement.
The Grand Opening Obligation is separate from the ongoing Advertising Contribution and any local advertising requirements. Auntie Annes has the option to either require the franchisee to pay the Grand Opening Obligation to them or to the Ad Fund, which Auntie Annes will then use according to a grand opening advertising plan that they designate or approve.
If Auntie Annes requires the franchisee to conduct the grand opening advertising, the franchisee must get written approval for their advertising plan at least 30 days before the campaign's start date. The franchisee must use only approved advertising content and media. Auntie Annes has the right to request documentation proving compliance with the Grand Opening Obligation.
If a franchisee fails to meet these advertising expenditure requirements, Auntie Annes can either require them to spend the remaining amount on local marketing advertising (in addition to their Local Marketing Obligation) or spend the remaining amount themselves to promote the opening, with the franchisee then required to reimburse Auntie Annes for these expenses. If the franchisee relocates their business, Auntie Annes may require them to fulfill the Grand Opening Obligation again.