Are Bath Tune Up franchisees contractually obligated to contribute NAF fees?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
The franchisees are contractually obligated to contribute NAF fees for the purpose of providing national advertising for the benefit of the franchisees. Variable sales-based NAF fees are recognized as revenue in the period the franchisee generates sales. The franchise agreements allow the Company to retain a certain percentage of NAF fees for consideration of the administration of the brand advertising fund.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 51–52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, franchisees are contractually obligated to contribute to the National Advertising Fund (NAF). These NAF fees are used to fund national advertising initiatives that benefit all Bath Tune Up franchisees. The fees are variable and based on sales, meaning the amount a franchisee contributes is directly tied to their revenue. Bath Tune Up recognizes these fees as revenue in the period the franchisee generates the sales.
Bath Tune Up retains a percentage of the NAF fees to cover the costs associated with administering the brand advertising fund. This means that not all of the collected NAF fees are directly spent on advertising; a portion is used to compensate Bath Tune Up for managing the fund.
For prospective Bath Tune Up franchisees, this contractual obligation means they must budget for ongoing NAF contributions as a percentage of their sales. While these contributions support national advertising efforts, franchisees should be aware that a portion of these funds will be used for administrative purposes by Bath Tune Up. Franchisees may want to inquire about the specific percentage retained for administration and how the remaining funds are allocated to different advertising channels to assess the value and effectiveness of the NAF.