What is the 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 established for national advertising and marketing on behalf of the entire Baya Bar system. Franchisees are required to contribute to this fund, with the initial contribution 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. The payments to the Brand Fund are to be made in the same manner and at the same time as the royalty fees. If a franchisee fails to report Gross Revenues on time, Baya Bar will collect 120% of the last Brand Fund Contribution payable and reconcile the amounts when Gross Revenues are reported.
The Brand Fund is intended to maximize public recognition and acceptance of the Baya Bar marks, enhancing the collective success of all franchised businesses operating under the Baya Bar system. Baya Bar has the sole discretion to approve or disapprove the creative concepts, materials, and media used in advertising and marketing programs, including their placement and allocation. The Brand Fund operates solely as a conduit for collecting and expending advertising contributions for the system and will not be used to cover Baya Bar's general operating expenses, except for reasonable administrative costs related to the fund's administration.
Baya Bar may contribute to the Brand Fund for outlets operated by them or their affiliates, but they are not obligated to do so. While Baya Bar does not intend to use the Brand Fund to solicit new franchisees, they reserve the right to use it for public relations, to explain the franchise system, and to include a notation in any advertisement indicating "Franchises Available." Baya Bar does not guarantee that expenditures from the Brand Fund will be equivalent or proportionate to a franchisee's contribution, nor that any franchisee will directly or pro rata benefit from the advertising. The Brand Fund is intended to be of perpetual duration, but Baya Bar can terminate it at any time, provided all monies are spent for advertising or promotional purposes or returned to contributors.
For a prospective Baya Bar franchisee, this means contributing a percentage of their gross revenue to a collective fund managed by the franchisor for the benefit of the entire brand. While franchisees contribute to the fund, they do not have direct control over how the funds are spent, and there is no guarantee of direct benefit proportionate to their contribution. Franchisees should consider the potential for increased contribution rates and the franchisor's discretion in fund allocation when evaluating the franchise opportunity.