What is the minimum amount Azal Coffee franchisees must spend monthly on local advertising and advertising cooperative fees?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Minimum Local Advertising and Advertising Cooperative | 1% of monthly Gross Sales | As incurred | You must spend this amount each month on advertising in your local market. (3) |
(2) The Franchise Agreement defines Gross Sales as the entire amount of the franchisee's revenues from the ownership or operation of the Franchise Business and any business at or about the Franchise Location or any approved remote locations including the proceeds of any business interruption insurance and any revenues received from the lease or sublease of a portion of the Franchise Location, whether the revenues are evidenced by cash, credit, checks, gift certificates, electronic payment, digital currency, food stamps, coupons and premiums (unless exempted by us), services, property or other means of exchange, minus only: (a) the amount of any sales taxes that are collected and paid to the taxing authority; (b) approved discounts given to customers if the non-discounted price is included in the revenues; and (c) cash refunded and credit given to customers and receivables uncollectible from customers if the cash, credit or receivables are or were included in revenues. Gross Sales include fees charged by third-party delivery service providers and are deemed received by the franchisee at the time the goods, products, merchandise, or services from which they derive are delivered or rendered or at the time the relevant sale takes place, whichever occurs first. Revenues of property or services (for example, "bartering" or "tradeouts") are valued at the prices applicable to the products or services exchanged for those revenues at the time the revenues are received.
- (3) You must provide documentation to our reasonable satisfaction that you have spent the required amount of local advertising or, in our discretion we may require you to pay the minimum local advertising amounts to us for advertising in your local market.
If we require you to pay the minimum local advertising amounts to us, we may use these amounts, in our discretion, for local advertising and promotion for you (including but not limited to Digital Advertising, social media or other internet posts, flyers, promotions, mailers, etc.) or as part of joint advertising or cooperative advertising.
If you fail to pay these amounts in your local market, you are required to pay the local advertising amount to us as additional royalty.
If you participate in joint advertising, you will pay your proportionate share of each advertisement.
If an advertising cooperative has been or is formed for your market, the cooperative may require advertising fees be paid to the cooperative, but only if authorized by a majority vote of the members of the cooperative.
As of the date of this Franchise Disclosure Document, no advertising cooperatives have been formed.
The amounts spent by you for local advertising, joint advertising, cooperative advertising, and any promotional programs specified by us will apply to your minimum local advertising obligations.
Except for pre-opening/grand opening advertising and any contributions to the marketing fund that we may require, you will not be required to spend more than the amounts specified in the table for local advertising, joint advertising, cooperative advertising, and promotional programs specified by us.
Source: Item 6 — OTHER FEES (FDD pages 12–19)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, franchisees are required to spend a minimum of 1% of their monthly Gross Sales on local advertising and advertising cooperative fees. This amount must be spent each month on advertising within the franchisee's local market. Gross Sales are defined as the total revenue from the franchise, including proceeds from business interruption insurance and revenues from leasing any portion of the franchise location, minus sales taxes, approved discounts, and refunds or credits to customers.
If a franchisee fails to adequately document that they have spent the required amount on local advertising, Azal Coffee has the discretion to require the franchisee to pay the minimum local advertising amount directly to them. In this case, Azal Coffee may use these funds for local advertising and promotion, including digital advertising, social media posts, flyers, and mailers, or as part of joint or cooperative advertising efforts. If the franchisee fails to spend the required amount in their local market, they will be required to pay the local advertising amount to Azal Coffee as additional royalty fees.
Franchisees may participate in joint advertising, where they will pay their proportionate share of each advertisement. If an advertising cooperative is formed for their market, the cooperative may require advertising fees, but only if authorized by a majority vote of the cooperative members. As of the date of the 2024 Franchise Disclosure Document, no advertising cooperatives have been formed. The amounts spent on local advertising, joint advertising, cooperative advertising, and any promotional programs specified by Azal Coffee will count toward the minimum local advertising obligations. Except for pre-opening/grand opening advertising and any contributions to the marketing fund that Azal Coffee may require, franchisees will not be required to spend more than the specified amounts on these advertising and promotional activities.