Is the minimum local advertising requirement for Azal Coffee franchisees separate from and in addition to grand opening advertising and marketing fund contributions?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You must spend a minimum of one percent (1%) of Gross Sales per month on advertising in your local market. You must provide us with documentation, at the times and in the form and manner specified by us, to prove that you spent the required amount on 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, flyers, promotions, mailers, etc.) or as part of joint advertising or cooperative advertising described in Section 9.4. We will collect these amounts by electronic funds transfer under Section 4.13. Your minimum local advertising requirement is separate from and in addition to your obligations for grand opening advertising and for contributions to the marketing fund.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the minimum local advertising requirement is indeed separate from and in addition to obligations for both grand opening advertising and contributions to the marketing fund. Franchisees must spend a minimum of 1% of gross sales per month on local advertising.
Azal Coffee has the discretion to require franchisees to pay the minimum local advertising amounts directly to them. If they do, Azal Coffee may use these funds for local advertising and promotion, including digital advertising, flyers, promotions, and mailers, or as part of joint or cooperative advertising efforts. Franchisees are required to provide documentation to prove they spent the required amount on local advertising.
This means that franchisees need to budget not only for the initial grand opening advertising and ongoing marketing fund contributions, but also for a separate, ongoing local advertising spend. The FDD specifies that the amounts spent on joint advertising, cooperative advertising, and promotional programs can be applied to the minimum local advertising obligation, with the exception of grand opening advertising. Franchisees should be aware of these distinct advertising obligations and plan their budgets accordingly.