Can Azal Coffee terminate 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 right to terminate the marketing fund. While Azal Coffee currently collects 1% of gross sales, they reserve the right to require franchisees to contribute up to 3% of their gross sales to a marketing fund.
However, Azal Coffee is not obligated to implement or continue the marketing fund. They can change the amount of contributions, suspend contributions, or terminate the fund altogether, and even reinstate it if terminated. Azal Coffee intends for all its franchises, including corporate and affiliate-owned stores, to contribute to the marketing fund at the same rate.
This clause provides Azal Coffee with significant flexibility over marketing fund operations. For a potential franchisee, this means that while they may be required to contribute to a marketing fund, there is no guarantee that the fund will exist or continue to operate throughout the term of their franchise agreement. It would be prudent for a prospective franchisee to inquire about Azal Coffee's long-term marketing plans and the likelihood of changes to the marketing fund.