Can Azal Coffee change the amount of contributions to the marketing fund?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
We currently collect 1% of Gross Sales and reserve the right to require that you make periodic contributions to a marketing fund in an amount of up to 3% of your Gross Sales. We are not obligated to implement a marketing fund or to continue the marketing fund, if implemented, and may change the amount or suspend contributions to or operations of the marketing fund or terminate the marketing fund (or reinstate the marketing fund if it is terminated). We intend that all Azal Coffee franchises will contribute to the marketing fund at the same rate. We further intend that our corporate and affiliate owned Stores will contribute to the marketing fund on the same basis as franchisees.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, Azal Coffee has the authority to modify the marketing fund contributions. Currently, franchisees contribute 1% of Gross Sales, but Azal Coffee retains the right to mandate periodic contributions of up to 3% of Gross Sales.
Azal Coffee is not obligated to implement or continue the marketing fund. They can change the contribution amount, suspend contributions, or terminate the fund entirely, and even reinstate it if terminated. The FDD states that Azal Coffee intends for all franchise locations, including corporate and affiliate-owned stores, to contribute to the marketing fund at the same rate.
This flexibility allows Azal Coffee to adjust marketing strategies and funding levels as needed. However, it also means that a franchisee's marketing expenses could increase up to 3% of gross sales at any time. Prospective franchisees should consider this potential fluctuation when evaluating the financial obligations of the franchise.