factual

What does 'Advertising Contributions' encompass for a Bang Cookies franchisee, including specific fees?

Bang_Cookies Franchise · 2024 FDD

Answer from 2024 FDD Document

eral enhancement of the System brand as associated with the Licensed Marks and general public brand recognition and awareness of the Licensed Marks. The Brand Development Fund will not be utilized to directly or indirectly market or promote the Franchised Business or, unless otherwise directed by Franchisor, in Franchisor's Reasonable Business Judgment, pay for media placements that may benefit or include any media market that includes Franchisee's Shop Location or Designated Territory;

  • (5) Franchisee agrees that the Brand Development Fund may be used to pay various costs and expenses of Franchisor for such reasonable salaries, wages, administrative costs and overhead as Franchisor may incur in activities reasonably related to the administration, activities and/or the brand awareness goals of the Brand Development Fund including expenses incurred by Franchisor for advertising, marketing, product and service testing, product and service development, maintenance, evaluation and monitoring of the Business Management Systems, upgrades to the System Website, development of Digital Media and creative development that is internally administered or prepared by Franchisor and other marketing activities made by Franchisor, provided, however, that salary expenses for Franchisor's personnel paid by the Brand Development Fund shall be commensurate with the amount of that time spent by such personnel on Brand Development Fund matters. Franchisor shall not use contributions to the Brand Development Fund to defray any of Franchisor's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Franchisor may incur in activities reasonably related to the

administration and activities of the Brand Development Fund and creation or conduct of its marketing programs including, without limitation, conducting market research, preparing advertising and marketing materials and collecting and accounting for contributions to the Brand Development Fund. Franchisor may spend in a fiscal year an amount greater or less than the aggregate contributions of all Bang Cookies Shops to the Brand Development Fund in that year;

  • (6) Franchisee agrees to participate in all advertising, marketing, promotions, research and public relations programs instituted by the Brand Development Fund;
  • (7) Bang Cookies Shops owned by Franchisor or Franchisor's affiliates are not required to pay any Brand Development Fund Fee or contribute to or make any contribution to the Brand Development Fund;
  • (8) Franchisee and Franchisor acknowledge and agree that (a) the Brand Development Fund is not a trust, (b) Franchisor is not a trustee or fiduciary of the Brand Development Fund, and (c) Franchisor may deposit and maintain any and all funds of the Brand Development Fund Fee in Franchisor's general accounts. Brand Development Fund Fees are not required to be segregated from other assets or accounts of Franchisor. The Brand Development Fund is not required to expend Brand Development Fund Fees in the year that they are collected and the Brand Development Fund may borrow from Franchisor or other lenders at standard commercial interest rates to cover deficits of the Brand Development Fund, and Franchisor may cause the Brand Development Fund to invest any surplus for future use by the Brand Development Fund. All interest earned on monies contributed to the Brand Development Fund will be used to pay costs of the Brand Development Fund before other assets of the Brand Development Fund are expended.

Source: Item 23 — RECEIPTS (FDD pages 56–245)

What This Means (2024 FDD)

According to Bang Cookies' 2024 Franchise Disclosure Document, franchisees are required to participate in all advertising, marketing, promotions, research, and public relations programs instituted by the Brand Development Fund. The Brand Development Fund is used to cover various costs and expenses incurred by Bang Cookies for activities related to brand awareness. These activities include advertising, marketing, product and service testing, product and service development, maintenance, evaluation and monitoring of the Business Management Systems, upgrades to the System Website, development of Digital Media and creative development, and other marketing activities.

Bang Cookies may use the Brand Development Fund to pay for reasonable salaries, wages, administrative costs, and overhead for its personnel, but only commensurate with the time spent on Brand Development Fund matters. The document specifies that Bang Cookies will not use these contributions to cover general operating expenses, except for costs directly related to administering the Brand Development Fund and creating or conducting marketing programs. Bang Cookies is allowed to spend more or less than the total contributions from all Bang Cookies Shops in a given fiscal year.

Franchisees are obligated to make Advertising Contributions and are not allowed to withhold these payments, even in cases of alleged nonperformance or breach by Bang Cookies. Bang Cookies-owned shops are not required to pay into the Brand Development Fund. The FDD also clarifies that the Brand Development Fund is not a trust, and Bang Cookies is not a trustee or fiduciary of the fund, allowing Bang Cookies to deposit and maintain the funds in its general accounts without segregation.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.