Are incentive programs for employees or agents of the franchisee included in the Baya Bar franchisee's expenditures on Local Advertising?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
spend monthly, throughout the term of this Agreement, not less than one percent (1%) of Franchisee's Gross Revenue per month on advertising for the Franchised Business in the Territory ("Local Advertising").
- 13.2.2 Within ten (10) business days of Franchisor's request, Franchisee shall provide a quarterly expenditure report accurately reflecting Franchisee's Local Advertising expenditures for the preceding quarterly period. The following costs and expenditures incurred by Franchisee shall not be included in Franchisee's expenditures on Local Advertising for purposes of this Section, unless approved in advance by Franchisor in writing: (i) incentive programs for employees or agents of Franchisee; (ii) research expenditures; (iii) salaries and expenses of any of Franchisee's personnel to attend advertising meetings, workshops or other marketing activities; (iv) charitable, political or other contributions or donations.
- 13.2.3 Franchisee shall spend at least Seven Thousand Five Hundred Dollars ($7,500.00) on Local Advertising and pro
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, franchisees are generally not allowed to include incentive programs for employees or agents in their reported Local Advertising expenditures. Baya Bar requires franchisees to spend at least 1% of their gross revenue per month on local advertising.
However, the FDD specifies certain costs that cannot be included in the Local Advertising expenditure calculation unless the franchisee obtains prior written approval from Baya Bar. These costs include incentive programs for employees or agents, research expenditures, salaries and expenses for personnel attending advertising meetings, and charitable or political contributions.
This means that if a Baya Bar franchisee wants to use employee incentives as part of their local advertising strategy and have it count towards their 1% spending requirement, they must first seek and receive written permission from the franchisor. Without this approval, such expenses will not be considered valid local advertising expenditures. Franchisees must also spend at least $7,500 on local advertising and promotional activities in the Territory sixty (60) days prior to and within the first thirty (30) days after the opening of the Franchised Business.