How is the advertising fee used by B Bops?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Advertising Fee. Franchisee agrees to pay Company an advertising fee equal to three percent (3%) of gross sales (as defined in Section 9(D) below) generated by the Franchise during each calendar month, beginning with the calendar month in which the Franchise opens for business and continuing for each subsequent calendar month during the Term hereof. Such fee shall be used by Company solely for development of advertising and promotional campaigns, which advertising and promotional campaigns shall be made available to Franchisee for implementation at its own expense in accordance with Section 10(D) hereof. Payments required under this Section shall be made together with the royalty and service fee payment and shall also be made to Company no later than twenty (20) days following the completion of the calendar month for which the advertising fee is being paid. Company may, in its sole discretion, elect to waive payment of all or a portion of the advertising fee provided for in this Section 9(C) for such period of time as Company may deem appropriate. Any such waiver may be revoked at such time as Company in its sole discretion may deem appropriate and Franchisee agrees to thereafter comply with this Section 9(C) in all respects. During any period of waiver of the entire fee, Company shall not be obligated to develop advertising and promotional campaigns for use by Franchisee.
- D. Definition of Gross Sales. For purposes of this Agreement, the term "gross sales" shall be defined to mean the aggregate amount of all sales of food, beverage and promotional items generated by the Franchise and shall include all sales, receipts and revenues in any form and from any and all sources whatsoever, directly or indirectly received by Franchisee as a result of the Franchise, whether for cash or credit and regardless of collection in the case of credit. The term "gross sales" shall also include all revenues derived from the sale of any product or service not included in the Licensed System, but for which Company has given its consent. The term "gross sales" shall not include the amount of any sales or other tax imposed by any federal, state, municipal or other governmental authority directly on sales and collected from patrons, provided that the amount of such tax is added to the selling price or otherwise absorbed therein and actually paid by Franchisee to such governmental authority.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the advertising fee, which is 3% of gross sales, is used solely for the development of advertising and promotional campaigns. These campaigns are then made available to the franchisee for implementation, but at the franchisee's own expense. The advertising fee is paid monthly, along with the royalty and service fee, no later than 20 days after the end of the calendar month. B Bops retains the right to waive the advertising fee at its discretion, and during any period where the fee is waived, B Bops is not obligated to develop advertising and promotional campaigns for the franchisee's use. Gross sales include all sales of food, beverage, and promotional items, whether for cash or credit, and also include revenues from products or services not part of the Licensed System but approved by B Bops. Gross sales do not include sales taxes collected from patrons and remitted to governmental authorities.
This means that a B Bops franchisee must allocate additional funds to execute the advertising campaigns developed by the franchisor. While the 3% advertising fee covers the creation of the campaigns, franchisees are responsible for the costs associated with actually running the ads in their local market. This could include expenses for print, radio, online advertising, or other promotional activities. The franchisee needs to factor in these additional costs when budgeting for ongoing operational expenses.
The discretion B Bops has to waive the advertising fee provides some flexibility, but it also introduces uncertainty. If the fee is waived, franchisees will not have access to franchisor-developed advertising materials, potentially impacting their marketing efforts. Franchisees should inquire about the conditions under which B Bops might waive the fee and how frequently such waivers have occurred in the past. Understanding this policy can help franchisees better plan their marketing strategies and budgets.
In the franchise industry, it is common for advertising fees to be used for both the development and implementation of marketing campaigns. However, the B Bops franchise agreement stipulates that the franchisee is responsible for the implementation costs. Prospective franchisees should carefully consider this aspect and ensure they have sufficient capital to effectively market their B Bops restaurant in their local area.