How is Black Bear Diner contractually obligated to spend the marketing funds?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
n thereof. Although Franchisor will endeavor to manage the Marketing Fund in a manner that benefits franchisees uniformly, Franchisor cannot and does not ensure that any particular franchisee will benefit directly or pro rata from the placement of advertising by the Marketing Fund.
Franchisee's contribution may be used to meet any and all costs of producing, maintaining, administering and directing consumer advertising (including, without limitation, the cost of preparing and conducting television, radio, Internet, billboard, magazine and newspaper advertising campaigns and other public relations activities developing and/or hosting an Internet Web page of similar activities; employing advertising agencies to assist therein; and providing promotional brochures and other marketing materials to franchisees) and/or offsetting certain costs of a convention consisting of Franchisor employees and representatives and franchisees of the Black Bear Diner franchise system. The contributions by Franchisee and other franchisees to the Marketing Fund shall be maintained in a separate account from the funds of Franchisor and shall not be used to defray any of Franchisor's general operating expenses, except for such reasonable administrative costs and overhead, if any, as Franchisor may incur in activities reasonably related to the administration or direction of the Marketing Fund.
Each Black Bear Diner restaurant operated by Franchisor, or any affiliate of Franchisor, shall make contributions to the Marketing Fund equivalent to the contributions required of franchisees.
Although Franchisor intends the Marketing Fund to be of perpetual duration, Franchisor maintains the right to terminate the Marketing Fund. The Marketing Fund shall not be terminated, however, until all monies in the Marketing Fund have been expended for advertising and promotional purposes or returned to Franchisee on a pro rata basis.
An accounting of the operation of the Marketing Fund shall be prepared annually and shall be made available to Franchisee upon request. Franchisor reserves the right, at its option, to require that such annual accounting include an audit of the operation of the Marketing Fund prepared by an independent certified public accountant selected by Franchisor and prepared at the expense of the Marketing Fund.
Franchisee acknowledges that the Marketing Fund is not a trust and Franchisor assumes no fiduciary duty in administering the Marketing Fund.
11.3 Grand Opening Advertising
Franchisee is required and agrees to spend no less than FIVE THOUSAND FIVE HUNDRED DOLLARS ($5,500.00) sometime within one (1) week prior and eight (8) weeks following the opening of its Franchised Restaurant ("Grand Opening Advertising"). In addition, you must perform opening advertising as required by this paragraph every time that Franchisee relocates the Franchised Restaurant.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, franchisee contributions to the Marketing Fund can cover various costs related to consumer advertising. These costs include producing, maintaining, administering, and directing advertising campaigns across different media such as television, radio, internet, billboards, magazines, and newspapers. The funds can also be used for public relations activities, developing and hosting websites, employing advertising agencies, and providing promotional materials to franchisees. Additionally, the Marketing Fund can offset certain costs associated with conventions for Black Bear Diner employees, representatives, and franchisees. Each Black Bear Diner restaurant operated by the franchisor or its affiliates contributes to the Marketing Fund at the same rate as franchisees.
The funds contributed by franchisees are kept in a separate account from Black Bear Diner's general funds and cannot be used for the franchisor's general operating expenses. However, the franchisor can use the funds to cover reasonable administrative costs and overhead related to managing the Marketing Fund. While Black Bear Diner intends for the Marketing Fund to be perpetual, it reserves the right to terminate the fund, but only after all monies have been spent on advertising and promotional purposes or returned to franchisees on a pro rata basis.
Black Bear Diner provides an annual accounting of the Marketing Fund's operation, available to franchisees upon request. The franchisor can also opt to include an audit of the Marketing Fund, prepared by an independent certified public accountant at the Marketing Fund's expense. It is important to note that the Marketing Fund is not a trust, and Black Bear Diner does not assume a fiduciary duty in administering it. Black Bear Diner maintains sole discretion over advertising programs, including creative concepts, materials, media, and allocation, but does not guarantee any franchisee will directly benefit from advertising placement.