If an Auntie Annes franchisee contributes to an Advertising Cooperative, can those contributions be counted towards the Local Marketing Obligation?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
- (ii) Compliance with the Local Marketing Obligation.
Any contributions that you make to an Advertising Cooperative (if one exists) may be counted towards your Local Marketing Obligation.
The following expenditures or costs will not count towards your Local Marketing Obligation: salaries, donations, press parties, in-store fixtures or equipment, menus, serving guides and nutritional facts, yellow page advertising, exterior or interior signage, and incentive programs, including costs of honoring coupons and food costs incurred in honoring sales promotions.
We have the right to require you to provide documentation that demonstrates your compliance with the Local Marketing Obligation.
If you fail to make advertising expenditures in accordance with this Section, we will have the right to spend an amount not to exceed your Local Marketing Obligation on local advertising for you, and you must reimburse us for these expenses.
Your failure to comply with this Section10.1.E. is a material breach of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, contributions to an Advertising Cooperative can be counted toward the Local Marketing Obligation. Specifically, any contributions that an Auntie Annes franchisee makes to an Advertising Cooperative, if one exists, may be counted towards their Local Marketing Obligation. This provides a mechanism for franchisees to collaborate on advertising efforts and potentially satisfy their local marketing requirements through collective action. However, this is only if an Advertising Cooperative exists.
It's important to note that not all expenditures qualify for the Local Marketing Obligation. The FDD specifies certain expenditures or costs that will not count towards the Local Marketing Obligation, such as salaries, donations, press parties, in-store fixtures or equipment, menus, serving guides and nutritional facts, yellow page advertising, exterior or interior signage, and incentive programs, including costs of honoring coupons and food costs incurred in honoring sales promotions. Therefore, franchisees should carefully track their advertising expenses and ensure they meet the criteria for inclusion in the Local Marketing Obligation.
Furthermore, the FDD states that if Auntie Annes collects the entire Local Marketing Obligation from the franchisee, the franchisee will not be required to participate in, or contribute to, the Advertising Cooperative. This indicates that the franchisee's participation in the Advertising Cooperative is contingent upon them managing their own local marketing efforts, rather than Auntie Annes managing it for them. If a franchisee becomes delinquent in their dues or other payments to the Advertising Cooperative or fails to abide by any formal agreements or authorized decisions of the Advertising Cooperative, the delinquency or failure will be deemed a failure to participate in the Advertising Cooperative and a material breach of the Franchise Agreement.