What is the Marketing and Promotion Fee used for regarding Bhc restaurants?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
ative members and us. We have no present plan to sell goods or services to any advertising cooperative.
(ix) The Marketing and Promotion Fee may be used to meet all costs of administering, directing, preparing, placing, and paying for national, regional, or local advertising to promote and enhance the image, identify or patronage of BHC Restaurants owned by us or our affiliates and by franchisees. We will either transfer such Marketing and Promotion Fee to a separate entity to which we have delegated the responsibility to operate and maintain it or administratively segregate on our books and records the fees we receive from franchisees ("Fund"). However, we are not required to maintain the fees paid by you or other franchises to the Fund and income earned by the Fund in a separate account.
(x) We may not use this money principally to solicit new franchise sales for any purposes other than those provided for in the MFA. We may include information regarding acquiring a franchise on or as a part of materials and items produced by or for the Marketing and Promotion Fee.
(xi) We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Marketing and Promotion Fee in that year and may cause it to borrow funds to cover deficits or invest in surplus funds. If we spend less than the total of all contributions to the fund during any fiscal year, we may accumulate those sums for use in later years. If we or an affiliate advances money to the Fund beyond what it contributes on account of our company or affiliate-owned BHC Restaurant, we will be entitled to reimbursement. Any interest earned on monies held in the Fund may be retained by us for our own use, in our discretion.
(xii) Although we intend the Fund to be perpetual, we can terminate the Fund for the Marketing and Promotion Fee. We will not terminate the Fund until it has spent all money in the fund for advertising and promotional purposes.
- (xiii) In 2024, we neither collected nor expended any Marketing and Promotion Fees.
(xiv) We require you, your Affiliate Franchisee, or your Subfranchisees to spend at least $10,000 to $13,000 on the initial opening advertising and promotion event in connection with the opening of a Master Franchised BHC Restaurant sometime during the first 60 days after a Master Franchised BHC Restaurant opens (see section 4.4(c) of the MFA). Not later than 75 days after the Opening Date, you and your Subfranchisees must provide us with a report itemizing your expenditures on the initial opening advertising and promotion of a Master Franchised BHC Restaurant. If you fail to meet the initial opening advertising and promotion, you will be required to add the shortage toward the Marketing and Promotion Fee.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, And Training (FDD pages 29–38)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the Marketing and Promotion Fee is used to cover the costs of advertising and promotion for Bhc restaurants. Specifically, the fee can be used to administer, direct, prepare, place, and pay for national, regional, or local advertising. These advertising efforts are intended to promote and enhance the image, identity, or patronage of Bhc restaurants, whether they are owned by the company, its affiliates, or franchisees. Bhc may transfer the Marketing and Promotion Fee to a separate entity or administratively segregate the fees. However, Bhc is not required to maintain the fees in a separate account.
Bhc franchisees are required to pay a Marketing and Promotion Fee of 2.5% of their monthly Gross Revenue. However, Bhc is not currently requiring this contribution because they do not anticipate brand marketing until there are at least 50 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. Bhc need not ensure that any particular franchisee benefits directly or proportionately from the Marketing and Promotion Fee.
Bhc can spend more or less than the aggregate contributions to the Marketing and Promotion Fee in any fiscal year and may borrow funds to cover deficits or invest surplus funds. If Bhc spends less than the total contributions, it can accumulate the funds for use in later years. Any interest earned on monies held in the Fund may be retained by Bhc for its own use, at its discretion. Although Bhc intends the Fund to be perpetual, it can terminate the Fund for the Marketing and Promotion Fee, but not until it has spent all money in the fund for advertising and promotional purposes. In 2024, Bhc neither collected nor expended any Marketing and Promotion Fees.