Can Auntie Annes increase the Advertising Contribution with notice to franchisees?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
We may increase the Advertising Contribution by notice to franchisees. However, your required Advertising Contribution and Local Marketing Obligation will collectively not exceed 5% of your Net Sales. Your Advertising Contribution is in addition to your Local Marketing Obligation and your Grand Opening Obligation (as defined below).
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 61–77)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, Auntie Annes has the ability to increase the Advertising Contribution with notice to franchisees. Currently, franchisees must make a monthly Advertising Contribution to the Ad Fund in the amount of 1.5% of Net Sales for Shops located in Other Locations and 3% of Net Sales for Shops located in Streetside Locations.
However, the document stipulates that the total of the Advertising Contribution and the Local Marketing Obligation will not exceed 5% of Net Sales. The Advertising Contribution is in addition to the Local Marketing Obligation and the Grand Opening Obligation.
This means that while Auntie Annes can raise the advertising contribution, there is a limit to how much it can be increased. For a prospective franchisee, this provides some assurance that advertising costs will not become unreasonably high, as they are capped at 5% of net sales when combined with the local marketing obligation. Franchisees should factor in these potential increases when projecting their operating expenses.