If Bhc begins using public figures, will franchisees be required to contribute to the cost?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
4.4 Marketing, Advertising and Promotion.
- (a) Beginning on the Opening Date, Franchisee must pay Franchisor a "Marketing and Promotion Fee" of 2.5 of Franchisee's Gross Revenues.
However, Franchisor is not requiring this contribution at this time because Franchisor does not anticipate brand marketing until Franchisor has at least 50 Franchised BHC Restaurants in operation.
If established, this fee is due and payable at the same time and in the same manner as Royalty Fee.
Franchisor reserves the right to require payment of this fee once Franchisor has more than 50 Franchised BHC Restaurants in operation.
Once BHC starts to require payment, Marketing and Promotion Fees collected from BHC franchisees less a 15% administration fee will be spent for national and regional advertising and promotional campaigns designed to promote and enhance the value of the BHC trademarks and their general public recognition and acceptance.
We need not ensure that any particular franchisee benefits directly or proportionately from the Marketing and Promotion Fee.
Source: Item 18 — Public Figures (FDD page 49)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees may be required to contribute to the cost of marketing and promotion, which could include campaigns featuring public figures, through a Marketing and Promotion Fee. Currently, Bhc is not collecting this fee, as they do not anticipate brand marketing until there are at least 50 franchised locations in operation. However, Bhc retains the right to implement this fee once the 50-location threshold is surpassed.
If the Marketing and Promotion Fee is established, franchisees will be required to pay 2.5% of their Gross Revenues, with the funds, less a 15% administration fee, being allocated to national and regional advertising and promotional campaigns. Bhc retains full discretion over these campaigns, including the form of media, content, and timing. While the funds are intended to enhance the value of the Bhc trademarks and increase public recognition, there is no guarantee that any specific franchisee will directly or proportionately benefit from these marketing efforts.
In addition to the potential Marketing and Promotion Fee, franchisees are also obligated to spend at least 1% of their annual Gross Revenues on local advertising, using materials pre-approved by Bhc. Furthermore, Bhc may impose additional assessments for special advertising or promotional activities on a regional or system-wide basis, provided that two-thirds of the affected franchisees agree to the assessment by affirmative vote. Franchisees are also required to participate in any gift card, customer loyalty, and other contests or promotions that Bhc arranges or requires.
Therefore, if Bhc decides to use public figures in its marketing campaigns, the costs could be covered by the Marketing and Promotion Fee, which franchisees may be required to pay once the franchise system reaches a certain size. Additionally, franchisees could be subject to additional assessments for specific campaigns if approved by a majority vote. Prospective franchisees should inquire about Bhc's long-term marketing plans and the likelihood of the Marketing and Promotion Fee being implemented.