What discretion does Aw have over the market placement of the Marketing Fund's advertising?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
ess to the Internet for communicating with and receiving information from us, and for on-line ordering for customers.
12. ADVERTISING
12.1 Marketing Fund. We administer a system-wide marketing fund ("Marketing Fund"). Your required contributions to the Marketing Fund are set forth in Paragraph 10.3 of this Agreement.
We will be entitled to direct all advertising, marketing and promotional programs financed by the Marketing Fund, with sole discretion over the creative concepts, materials, and endorsements used in them, and the geographic, market, and media placement and allocation of the programs. You agree that the Marketing Fund may be used to pay the costs of preparing and producing video, audio and written advertising materials; administering national, regional or local advertising programs including, without limitation, direct mail and other media advertising, and employing advertising agencies to assist in those activities; establishing and maintaining the Company Website; supporting public relations, market research and marketing activities; and providing advertising, marketing and promotional materials to Papa Ray's Pizza Restaurants. The Marketing Fund will furnish you with approved advertising, marketing and promotional materials at its direct cost of producing those materials.
The Marketing Fund will be a separate and distinct account and will be accounted for separately from the other funds of the Company and will not be used to defray any of our general operating expenses, except for any reasonable salaries, administrative costs and overhead we may incur in activities reasonably related to the administration of the Marketing Fund and its advertising, marketing and promotional programs (including, without limitation, conducting market research, preparing advertising, marketing and promotional materials, and collecting and accounting for contributions to the Marketing Fund). We may spend in any fiscal year an amount greater or less than the total contribution of Papa Ray's Pizza Restaurants to the Marketing Fund in that year. We may cause the Marketing Fund to borrow from us or other lenders to cover deficits of the Marketing Fund or cause the Marketing Fund to invest any surplus for future use by the Marketing Fund. All interest earned on monies contributed to the Marketing Fund will be used to pay advertising, marketing and promotional costs of the Marketing Fund before other assets of the Marketing Fund are expended.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw has extensive control over the advertising, marketing, and promotional programs financed by the Marketing Fund. Specifically, Aw has sole discretion over the creative concepts, materials, and endorsements used in these programs, as well as the geographic, market, and media placement and allocation of the programs. This means Aw decides where and how the Marketing Fund's resources are spent on advertising.
This discretion allows Aw to direct advertising efforts in a way that it believes will most benefit the Aw system as a whole. The Marketing Fund can be used to cover various costs, including preparing advertising materials, administering advertising programs (such as direct mail and media advertising), maintaining the company website, supporting public relations and market research, and providing materials to Aw restaurants. The Marketing Fund is maintained as a separate account, and while it is intended to maximize recognition of the Aw marks and patronage of Aw restaurants, Aw is not obligated to ensure that expenditures in any geographic area are proportionate to contributions from restaurants in that area.
For a prospective franchisee, this means that while they are required to contribute to the Marketing Fund, they have limited control over how those funds are spent. Aw could choose to focus advertising efforts in different regions or through different media channels than what might directly benefit a specific franchisee's location. Franchisees are also required to spend a minimum of $3,800 per month on local advertising, giving them some control over advertising in their immediate area. However, these local advertising efforts are subject to Aw's approval and direction.
Aw will furnish franchisees with approved advertising, marketing, and promotional materials at its direct cost of producing those materials. Franchisees can request an annual statement of monies collected and costs incurred by the Marketing Fund. In the event that Aw discontinues the Marketing Fund, all unspent amounts will be distributed to franchisees in proportion to their contributions over the most recent six months.