What is the prohibited action regarding the use of the Advertising Fund for Bens Soft Pretzels?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
The Advertising Fund will be accounted for separately from our other funds and will not be used to defray any of our general operating expenses, except for reasonable salaries, administrative costs and overhead as we may incur in activities reasonably related to the administration of the Advertising Fund and its advertising and marketing programs including conducting market research, preparing advertising and marketing materials and collecting and accounting for contributions to the Advertising Fund. We may spend in any fiscal year an amount greater or less than the aggregate contribution of all stores to the Advertising Fund in that year and the Advertising Fund may borrow from us or other lenders to cover deficits of the Advertising Fund or cause the Advertising Fund to invest any surplus for future use by the Advertising Fund. A report of receipts and disbursements of the Advertising Fund, which may be audited, will be prepared annually by us and will be furnished to you upon written request. Currently. The Advertising Fund is not audited.
We will have the right to cause the Advertising Fund to be incorporated or operated through an entity separate from us at the time as we deem appropriate, and the entity will have the same rights and duties as we do. Although we will endeavor to utilize the Advertising Fund to develop advertising and marketing materials and programs, and to place advertising that will benefit all stores, we undertake no obligation to ensure that expenditures by the Advertising Fund in or affecting any geographic area are proportionate or equivalent to the contributions to the Advertising Fund by stores operating in that geographic area or that any store will benefit directly or in proportion to its contribution to the Advertising Fund from the development of advertising and marketing materials or the placement of advertising.
We will have the right to suspend contributions to and operation of the Advertising Fund for one or more periods that we determine to be appropriate and the right to terminate the Advertising Fund upon 30 days written notice to you. All unspent monies on the date of termination will be distributed to us, our affiliates and our franchisees in proportion to their respective contributions to the Advertising Fund during the preceding 12 month period. We will have the right to reinstate the Advertising Fund upon the same terms and conditions set forth in the Franchise Agreement upon 30 days prior written notice to you.
Except for two units owned by one of the owners of the franchisor, the stores owned by us or companies related to us by common ownership contribute on the same basis to the Advertising Fund as franchisees.
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' 2025 Franchise Disclosure Document, the Advertising Fund must be accounted for separately from the franchisor's other funds. The funds cannot be used to cover Bens Soft Pretzels' general operating expenses. However, the fund can be used for reasonable salaries, administrative costs, and overhead that Bens Soft Pretzels incurs while administering the Advertising Fund and its advertising and marketing programs. These activities include market research, preparing advertising and marketing materials, and managing contributions to the Advertising Fund.
Bens Soft Pretzels may spend more or less than the total contributions from all stores in a given fiscal year. The Advertising Fund is allowed to borrow money from Bens Soft Pretzels or other lenders to cover deficits or invest any surplus for future use. Franchisees are entitled to receive an annual report of the Advertising Fund's receipts and disbursements, which may be audited, upon written request. Currently, the Advertising Fund is not audited.
Bens Soft Pretzels has the right to incorporate the Advertising Fund or operate it through a separate entity, which would have the same rights and duties as Bens Soft Pretzels. While Bens Soft Pretzels aims to use the Advertising Fund to create advertising and marketing materials and programs that benefit all stores, there is no guarantee that the expenditures in any specific geographic area will be proportional to the contributions from stores in that area. Additionally, there is no guarantee that any store will directly benefit from the fund in proportion to its contribution.
Bens Soft Pretzels can suspend contributions to and operation of the Advertising Fund or terminate it with 30 days' written notice to franchisees. If the Advertising Fund is terminated, any unspent money will be distributed to Bens Soft Pretzels, its affiliates, and its franchisees in proportion to their contributions to the fund during the preceding 12 months. The franchisor can reinstate the Advertising Fund under the same terms and conditions with 30 days' prior written notice. Except for two units owned by one of the owners of the franchisor, stores owned by Bens Soft Pretzels or related companies contribute to the Advertising Fund on the same basis as franchisees.