How does Big Frog Custom T Shirts More administer the Brand Fund?
Big_Frog_Custom_T_Shirts_More Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall conduct Franchisee's grand opening campaign in accordance with plans approved by
Franchisor. Franchisor reserves the right to collect some or all of Franchisee's grand opening funds and implement grand opening campaign activities on Franchisee's behalf.
13.3 Brand Fund.
- 13.3.1 Franchisor has established a national fund on behalf of the System for national advertising, marketing, and brand development (the "Brand Fund"). Franchisee is required to contribute a percentage of the Gross Revenue generated monthly by Franchisee's Franchised Business to the Brand Fund, as determined by Franchisor ("Brand Fund Contribution"). Franchisor reserves the right, in Franchisor's sole discretion and at any time and from time to time, to increase the amount of the Brand Fund Contribution to any amount not to exceed one and a half percent (1.5%) of Franchisee's Gross Revenue. Payments will be made in the same manner and time as the Royalty Fees. If Franchisee fails to timely report Gross Revenue, then, in addition to a late fee and interest pursuant to Sections 6.2 and 6.3 hereof, Franchisor shall collect one hundred twenty percent (120%) of the last Brand Fund Contribution payable. Franchisor shall reconcile amounts when Gross Revenues are reported.
- 13.3.2 Franchisor shall direct the Brand Fund and shall have sole discretion to approve or disapprove the creative concepts, materials and media used in such programs and the placement and allocation thereof. Franchisee agrees and acknowledges that the Brand Fund is intended to maximize general public recognition and acceptance of the Marks and enhance the collective success of all Franchised Businesses operating under the System.
- 13.3.3 Franchisor may, but has no obligation to, contribute to the Brand Fund on the same basis as Franchisee with respect to Big Frog outlets operated by Franchisor or Franchisor's affiliates.
- 13.3.4 Franchisor may use the Brand Fund to satisfy any and all costs of developing, preparing, producing, directing, administering, conducting, maintaining and disseminating advertising, marketing, promotional and public relations materials, programs, campaigns, sales and marketing seminars and training programs of every kind and nature, through media now existing or hereafter developed (including, without limitation, the cost of television, radio, magazine, social media, newspaper and electronic advertising campaigns; direct mail and outdoor billboard advertising; public relations activities; conducting marketing research, employing advertising agencies to assist therein; developing, enhancing and maintaining the Website; and staff salaries and other personnel and departmental costs for advertising that Franchisor internally administers or prepares). 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 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 except that any resulting technology and intellectual property shall be deemed the property of Franchisor.
- 13.3.6 In administering the Brand Fund, Franchisor undertakes no obligation to make expenditures for Franchisee that are equivalent or proportionate to Franchisee's contribution or to ensure
- that any particular franchisee benefits directly or pro rata from the production or placement of advertising.
- 13.3.7 Although the Brand Fund is intended to be of perpetual duration, Franchisor may terminate it at any time and for any reason or no reason. Franchisor will not terminate the Brand Fund, however, until all monies in the Brand Fund have been spent for advertising or promotional purposes or returned to contributors, without interest, on the basis of their respective contributions.
- 13.4 Regional Advertising. Franchisor reserves the right to establish, in Franchisor's sole discretion, a regional advertising cooperative.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2024 FDD)
According to Big Frog Custom T Shirts More's 2024 Franchise Disclosure Document, the Brand Fund is directed by the Franchisor, who has the sole discretion to approve or disapprove the creative concepts, materials, and media used in advertising, marketing, and brand development programs, including their placement and allocation. The Brand Fund is intended to maximize general public recognition and acceptance of the brand and enhance the collective success of all franchised businesses operating under the Big Frog Custom T Shirts More system. Franchisees are required to contribute a percentage of their monthly Gross Revenue to the Brand Fund; the franchisor can increase this amount up to a maximum of 1.5% of Gross Revenue. Payments to the Brand Fund are made in the same manner and time as royalty fees. If a franchisee fails to report Gross Revenue on time, Big Frog Custom T Shirts More will collect 120% of the last Brand Fund Contribution payable, in addition to late fees and interest. The franchisor will reconcile amounts when Gross Revenues are reported.
Big Frog Custom T Shirts More may contribute to the Brand Fund on the same basis as franchisees for outlets operated by the franchisor or its affiliates, but has no obligation to do so. The franchisor can use the Brand Fund to cover costs related to advertising, marketing, promotional, and public relations materials, programs, campaigns, sales, and marketing seminars. This includes various media such as television, radio, magazines, social media, newspapers, electronic advertising campaigns, direct mail, outdoor billboard advertising, public relations activities, marketing research, advertising agencies, website development, and staff salaries. While the franchisor does not intend to use the Brand Fund for franchisee solicitation, it reserves the right to use it for public relations to explain the franchise system or include a notation indicating "Franchises Available" in any advertisement.
The Brand Fund will not be used to cover Big Frog Custom T Shirts More's general operating expenses, except for reasonable administrative costs and overhead related to the administration and direction of the Brand Fund. The Brand Fund's earnings will not benefit the franchisor, except that any resulting technology and intellectual property will be deemed the property of the franchisor. Big Frog Custom T Shirts More has no obligation to ensure that expenditures for a franchisee are equivalent or proportionate to the franchisee's contribution or that any particular franchisee benefits directly or pro rata from the advertising.
Big Frog Custom T Shirts More may terminate the Brand Fund at any time and for any reason. This gives the franchisor significant control over the fund and its usage, which may impact franchisees differently based on the franchisor's strategic decisions. Prospective franchisees should consider the franchisor's broad discretion in managing the Brand Fund and how it aligns with their expectations for marketing and brand support.