Under what circumstances can the Baya Bar Brand Fund be used for purposes related to franchising?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the Brand Fund can be used for public relations to explain the franchise system and/or to include a notation in any advertisement indicating "Franchises Available." While Baya Bar does not intend for the Brand Fund to be primarily used to solicit new franchisees, it reserves the right to use it for these specific purposes.
This means that a portion of the funds, which are contributed by franchisees as a percentage of their gross revenue, may be used to attract new franchisees to the Baya Bar system. The franchisee should be aware that their contributions to the Brand Fund could indirectly support the growth of the franchise network by attracting new franchisees.
Baya Bar also specifies that the Brand Fund will be operated solely as a conduit for collecting and expending advertising contributions for the system. It will not be used to defray general operating expenses, except for reasonable administrative costs and overhead related to the administration and direction of the Brand Fund, as well as costs and expenses pursuant to Section 13.3.4, which details advertising and marketing activities. The Brand Fund and its earnings shall not otherwise benefit Baya Bar, except as outlined.
Prospective franchisees should consider that while the Brand Fund is primarily for marketing and advertising to benefit the Baya Bar brand, a portion of it can be used for franchise development purposes. Franchisees should inquire about the allocation of the Brand Fund between consumer advertising and franchise development to understand how their contributions are being used.