How can Azal Coffee use the local advertising amounts paid to them by the franchisee?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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- (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.
Source: Item 6 — OTHER FEES (FDD pages 12–19)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, if a franchisee fails to provide documentation of local advertising expenses or fails to spend the required amount, Azal Coffee has the discretion to require the franchisee to pay the minimum local advertising amounts directly to them. The minimum local advertising amount is 1% of monthly Gross Sales.
Azal Coffee can then use these funds for local advertising and promotion on behalf of the franchisee. This may include digital advertising, social media or other internet posts, flyers, promotions, and mailers. Azal Coffee can also use the funds as part of joint or cooperative advertising efforts. This gives Azal Coffee control over advertising if they deem the franchisee is not fulfilling their local advertising obligations.
If the franchisee fails to pay the local advertising amount, it will be considered an additional royalty payment to Azal Coffee. Franchisees are required to participate in joint advertising and pay their proportionate share of each advertisement. The amounts spent by the franchisee for local advertising, joint advertising, cooperative advertising, and any promotional programs specified by Azal Coffee will count toward the minimum local advertising obligations.