What is the intended purpose of the Baya Bar Brand Fund?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
n the Territory sixty (60) days prior to and within the first thirty (30) days after the opening of the Franchised Business to promote the opening of the Franchisee's Franchised Business.
13.3 Brand Fund.
13.3.1 Franchisor has established a national Brand Fund (the "Brand Fund") on behalf of the System for national advertising and marketing. Franchisee is required to contribute an amount equal to one percent (1%) of the Gross Revenue generated weekly by Franchisee's Franchised Business to the Brand Fund ("Brand Fund Contribution"). Franchisor reserves the right, in Franchisor's sole discretion and at any time and from time to time, to increase the amount of the Brand Fund Contribution to any amount not to exceed three percent (3%) of the Gross Revenue. Payments will be made in the same manner and time as the Royalty Fees. If Franchisee fails to timely report Gross Revenue, then, in addition to a late fee and interest pursuant to Sections 6.3 and 6.4 hereof, Franchisor shall collect one hundred twenty percent (120%) of the last Brand Fund Contribution payable. Franchisor shall reconcile amounts when Gross Revenues are reported.
- 13.3.2 Franchisor shall direct all brand advertising and marketing programs and shall have sole discretion to approve or disapprove the creative concepts, materials and media used in such programs and the placement and allocation thereof. Franchisee agrees and acknowledges that the Brand Fund is intended to maximize general public recognition and acceptance of the Marks and enhance the collective success of all Franchised Businesses operating under the System.
- 13.3.3 Franchisor may, but has no obligation to, contribute to the Brand Fund on the same basis as Franchisee with respect to Baya Bar outlets operated by Franchisor or Franchisor's affiliates.
- 13.3.4 Franchisor may use the Brand Fund to satisfy any and all costs of developing, preparing, producing, directing, administering, conducting, maintaining and disseminating advertising, marketing, promotional and public relations materials, programs, campaigns, sales and marketing seminars and training programs of every kind and nature, through media now existing or hereafter developed (including, without limitation, the cost of television, radio, magazine, social media, newspaper and electronic advertising campaigns; direct mail and outdoor billboard advertising; public relations activities; conducting marketing research, employing advertising agencies to assist therein; developing, enhancing and maintaining the Website, social media platforms, apps, and other technology for the benefit of the Baya Bar brand image and/or Systemwide improvements; and staff salaries and other personnel and departmental costs for advertising that Franchisor internally administers or prepares). While Franchisor does not intend that any part of the Brand Fund will be used for advertising which is principally a solicitation for franchisees, Franchisor reserves the right to use the Brand Fund for public relations, to explain the franchise system, and/or to include a notation in any advertisement indicating "Franchises Available."
- 13.3.5 The Brand Fund will be operated solely as a conduit for collecting and expending the advertising contributions for the System. The Brand Fund will not be used to defray any of Franchisor's general operating expenses, except for reasonable administrative costs and overhead that Franchisor may incur in activities related to the administration and direction of the Brand Fund and such costs and expenses pursuant Section 13.3.4. The Brand Fund and its earnings shall not otherwise inure to Franchisor's benefit.
- 13.3.6 In administering the Brand Fund, Franchisor undertakes no obligation to make expenditures for Franchisee that are equivalent or proportionate to Franchisee's contribution or to ensure that any particular franchisee benefits directly or pro rata from the production or placement of advertising.
- 13.3.7 Although the Brand Fund is intended to be of perpetual duration, Franchisor may terminate it at any time and for any reason or no reason. Franchisor will not terminate the Brand Fund, however, until all monies in the Brand Fund have been spent for advertising or promotional purposes or returned to contributors, without interest, on the basis of their respective contributions.
- 13.4 Regional Advertising. Franchisor reserves the right to establish, in Franchisor's sole discretion, a regional advertising cooperative.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the Brand Fund is intended for national advertising and marketing efforts to maximize public recognition and acceptance of the Baya Bar marks, ultimately enhancing the success of all franchised businesses within the system. Franchisees are required to contribute to this fund, with the contribution initially set at one percent (1%) of their weekly Gross Revenue. However, Baya Bar retains the right to increase this contribution up to a maximum of three percent (3%) of Gross Revenue. Payments to the Brand Fund are to be made in the same manner and at the same time as royalty fees.
The Brand Fund is to be used to cover the costs associated with developing, preparing, producing, and disseminating advertising, marketing, and public relations materials across various media platforms. These include television, radio, magazines, social media, newspapers, and electronic advertising campaigns, as well as direct mail and outdoor billboard advertising. The fund also supports public relations activities, marketing research, website and app development, and the salaries of personnel involved in advertising efforts. While Baya Bar aims to avoid using the Brand Fund for direct franchisee solicitation, it reserves the right to use it for public relations purposes, explaining the franchise system, and including franchise availability notices in advertisements.
The Brand Fund operates as a conduit for advertising contributions and is not intended to cover Baya Bar's general operating expenses, except for reasonable administrative costs related to managing the fund. The earnings from the Brand Fund are not to benefit Baya Bar directly. Baya Bar does not guarantee that expenditures from the Brand Fund will be equivalent or proportionate to each franchisee's contribution, nor does it ensure that each franchisee will directly benefit from the advertising efforts. Baya Bar also has the option to terminate the Brand Fund at any time, provided that all remaining funds are either spent on advertising or returned to the contributors.
Prospective franchisees should understand that while the Brand Fund aims to benefit the entire Baya Bar system, there is no guarantee of direct or proportionate benefits for individual franchisees. The franchisor has significant discretion over how the fund is used, and franchisees are required to contribute regardless of their individual circumstances or perceived benefits. It is important for potential franchisees to consider the implications of these terms and how they align with their business goals and financial expectations.