What is the relationship between contributions to the Marketing Fund and local advertising expenditures for Aw franchisees?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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development of advertising, marketing and promotional materials or the placement of advertising. Except as expressly provided in this Paragraph 12.1, we assume no direct or indirect liability or obligation to you with respect to the maintenance, direction, or administration of the Marketing Fund.
- 12.2 Local Advertising. Once you have completed the grand opening advertising campaign during the first three (3) months of operation of your Papa Ray's Pizza Restaurant, in addition to the requirement for you to contribute to the Marketing Fund, you must spend on local advertising, marketing and promotion a minimum of Three Thousand Eight Hundred Dollars ($3,800.00) per month throughout the term of this Agreement. Such expenditures will be made directly by you, subject to our approval and direction. We may require that you use suppliers designated by us for certain types of local advertising, marketing and promotion. Within thirty (30) days of the end of each calendar quarter, you must furnish to us in a manner approved by us an accurate accounting of your monthly local advertising and marketing expenditures for the previous calendar quarter.
- 12.3 Advertising Approval. Prior to your use of them, samples of all local advertising, marketing and promotional materials not prepared or previously approved by us, and all proposed content for any Internet or social media advertising or promotion, must be submitted to us for approval. If you do not receive our written approval within thirty (30) days from the date we receive the materials, the materials will be deemed to have been disapproved. You may not use any advertising or promotional materials that we have disapproved.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees are required to contribute to both a Marketing Fund and local advertising efforts. Aw administers the Marketing Fund, which is used for system-wide advertising, marketing, and promotional programs. The contribution to this fund is 2% of the Gross Revenue of the Papa Ray's Pizza Restaurant. Aw has sole discretion over how the Marketing Fund is spent, and while they aim to benefit all restaurants, there's no guarantee that the expenditures in any specific geographic area will be proportionate to the contributions from restaurants in that area.
In addition to the Marketing Fund contribution, Aw franchisees must spend a minimum of $3,800 per month on local advertising, marketing, and promotion after the initial three-month grand opening period. These local advertising expenditures are made directly by the franchisee but are subject to Aw's approval and direction. Aw may also require franchisees to use designated suppliers for certain types of local advertising. Franchisees must provide an accurate accounting of their monthly local advertising expenditures to Aw within 30 days of the end of each calendar quarter.
If a local or regional advertising cooperative is formed and approved by Aw, franchisees are required to participate and contribute to the cooperative. Contributions to the cooperative are credited towards the franchisee's local advertising expenditure requirements. This means that money spent on the cooperative counts towards the $3,800 monthly local advertising minimum. In summary, Aw franchisees must budget for both the 2% Marketing Fund contribution and the $3,800 minimum local advertising spend, with the potential for cooperative advertising to offset some of the local advertising costs.