Can the Bang Cookies Brand Development Fund be used for creative development that is internally administered or prepared by the Franchisor?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the Brand Development Fund can be used for creative development that is internally administered or prepared by the Franchisor. Specifically, the Brand Development Fund may cover the Franchisor's costs and expenses, including salaries, administrative costs, and overhead, related to the fund's administration and brand awareness goals. These activities include advertising, marketing, product and service testing, development, maintenance, upgrades to the System Website, Digital Media development, and creative development handled internally by Bang Cookies.
However, the FDD stipulates that salary expenses for Bang Cookies personnel paid by the Brand Development Fund must align with the time spent on Brand Development Fund matters. This ensures that the fund is used appropriately for its intended purposes, preventing it from subsidizing general operating expenses. 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.
This arrangement gives Bang Cookies significant control over the Brand Development Fund, including decisions on strategic direction, creative concepts, and media placement. While franchisees contribute to the fund, Bang Cookies is not obligated to ensure that expenditures in any geographic area are proportionate to the contributions from Bang Cookies Shops in that area, nor is there a guarantee that any Bang Cookies Shops will directly benefit in proportion to their contribution. This means that a franchisee's contribution to the Brand Development Fund does not guarantee direct or proportional benefits for their specific location.