Can Bang Cookies use the Brand Development Fund to reimburse themselves for administrative costs?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
t to exceed 2% of weekly Gross Sales to the Brand Development Fund. We may use the Brand Development Fund for market studies, research, service development, product development, testing, research studies, technology development, advertising and public relations studies or services, creative production and printing of advertising and marketing materials, advertising copy and commercials, tracking costs, agency fees, administrative costs, which may include reimbursement for direct administrative and personnel costs associated with advertising and public relations, and any other costs associated with the development, marketing and testing of advertising, marketing and public relations materials, and the purchase of media placement, advertising time and public relations materials in national, regional or other advertising and public relations media in a manner determined by us, in our discretion, to be in the best interest of the franchisees and the System. Our company and/or affiliate owned Shops may but are not required to contribute to the Brand Development Fund. The Brand Development Fund will maintain unaudited financial records detailing its expenditures and will make available to you, no more frequently than one time in any 12 month period, an unaudited accounting of how monies contributed to the Brand Development Fund were spent each year. We are not required to segregate the Brand Development Fund from our general operating funds and we are not a fiduciary or trustee of the Brand Development Fund. The Brand Development Fund will not be used to directly promote your Shop or the marketing area in which your Shop will be located. (Franchise Agreement, Article 9.A.). We may use the Brand Development Fund to develop and test various media and technologies for potential use and/or improvement of the operations of Shops and the marketing of Shops.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 29–36)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, the Brand Development Fund can be used to cover administrative costs. Franchisees contribute up to 2% of their weekly gross sales to this fund. Bang Cookies has the discretion to use the fund for various purposes, including market studies, research, service and product development, advertising, public relations, and administrative costs. These administrative costs may include reimbursements for direct administrative and personnel costs related to advertising and public relations.
Bang Cookies and its affiliated shops may contribute to the Brand Development Fund, but they are not required to do so. The fund maintains unaudited financial records, which are available to franchisees for review no more than once every 12 months. The funds are not required to be segregated from Bang Cookies' general operating funds, and Bang Cookies is not considered a fiduciary or trustee of the Brand Development Fund.
Furthermore, Bang Cookies may use the Brand Development Fund to compensate themselves for administrative fees associated with managing the fund, as well as for internal employee salaries, expenses, and overhead related to managing the fund's activities. This includes directing, developing, and managing media for the Brand Development Fund. However, the fund cannot be used to directly market the sale of Bang Cookies franchises, although it can be done indirectly by including franchise availability information in advertising and marketing materials.