What is the dependency between the Advertising Fund Fee and the Royalty Fee for Bens Soft Pretzels franchisees?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
You must contribute to the Advertising Fund up to 4% (currently 1.5%) of the Gross Sales of your Store, as determined by us, payable together with the Royalty Fee due under the Franchise Agreement. The Advertising Fund Fee is separate from any local marketing requirements. We have the right to increase the Advertising Fund Fee up to 4% upon 90 days' advance written notice, although if we increase the Advertising Fund Fee to 3% or 4% we will reduce the local advertising requirements accordingly such that your total required marketing expenditure does not exceed 4% of Gross Sales.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 23–30)
What This Means (2025 FDD)
According to Bens Soft Pretzels's 2025 Franchise Disclosure Document, the Advertising Fund Fee and the Royalty Fee are related in that they are both calculated based on a percentage of the Gross Sales of the store and are payable together. The franchisee must contribute up to 4% of Gross Sales to the Advertising Fund, with the actual percentage determined by Bens Soft Pretzels. Currently, this fee is set at 1.5% of Gross Sales. This Advertising Fund Fee is paid at the same time as the Royalty Fee, indicating an administrative connection in how these fees are collected.
Bens Soft Pretzels retains the right to increase the Advertising Fund Fee up to the maximum of 4% of Gross Sales. However, if Bens Soft Pretzels increases the Advertising Fund Fee to 3% or 4%, they will reduce the local advertising requirements accordingly. This ensures that the total required marketing expenditure for the franchisee does not exceed 4% of Gross Sales. This adjustment mechanism demonstrates a direct dependency between the Advertising Fund Fee and local advertising obligations, aiming to cap the franchisee's overall marketing expenses related to Gross Sales.
In practical terms, this means a prospective Bens Soft Pretzels franchisee needs to be aware that while the initial Advertising Fund Fee is 1.5% of Gross Sales, it could increase. If it does, the franchisee's obligation to spend money on local advertising will decrease, providing a degree of financial predictability. The franchisee should clarify with Bens Soft Pretzels what the current Royalty Fee is, and how it is calculated, to fully understand the combined financial obligations related to Gross Sales.