What happens if the Bang Cookies Franchisor does not institute a Brand Development Fund?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
MARKETING**
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Franchisor is not required to conduct any marketing on behalf of Franchisee or the System.
9.A. BRAND DEVELOPMENT FUND
At all times during the Term of this Agreement, as determined by Franchisor, in Franchisor's Reasonable Business Judgment, Franchisor may institute, implement, maintain, delegate and administer a brand development fund (the "Brand Development Fund"). The following shall apply to the Brand Development Fund at all times throughout the Term:
- (1) If Franchisor institutes the Brand Development Fund, Franchisee shall pay, on the Due Date, a mandatory and continuing fee to the Brand Development Fund in an amount equal to a percentage of Gross Sales (as determined and designated by Franchisor in Franchisor's Reasonable Business Judgment) for each weekly Accounting Period (the "Brand Development Fund Fee"), provided, however, Franchisee will not be required to contribute more than 2% of the Gross Sales of the Franchised Business for each weekly Accounting Period;
- (2) Franchisor will provide Franchisee with written notice of the percentage of Gross Sales that Franchisee is required to contribute to the Brand Development Fund. Upon such written notice to Franchisee, the percentage of Gross Sales to be paid by Franchisee to the Brand Development Fund will be applicable for each and every weekly Accounting Period thereafter during the Term until otherwise designated by Franchisor in writing. The Brand Development Fund Fee shall be paid to Franchisor on the Due Date and in accordance with the payment terms and method set forth in Article 5.B. for the payment of Royalty Fees;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the franchisor is not obligated to institute a Brand Development Fund. The document states, "Franchisor is not required to conduct any marketing on behalf of Franchisee or the System." This means that Bang Cookies franchisees may not benefit from a centrally managed marketing fund if the franchisor chooses not to establish one.
However, if Bang Cookies does not institute a Brand Development Fund, franchisees are still required to engage in local marketing. Franchisees must spend at least 2% of their quarterly gross sales on local marketing efforts within their designated territory. Franchisees must provide an accounting of these local marketing expenditures to Bang Cookies on or before the 5th day of each calendar year quarter. All marketing of the franchised business by the franchisee must be pre-approved, in writing by Bang Cookies.
If a Bang Cookies franchisee fails to meet the 2% local marketing expenditure requirement in any quarter, Bang Cookies has the discretion to require that the deficiency be added to the local marketing expenditures in the succeeding quarter, or at Bang Cookies's discretion, be contributed to a Brand Development Fund. This ensures that even without a Brand Development Fund, franchisees are still investing in marketing, either locally or potentially into a future fund if Bang Cookies decides to create one.