How are the contributions by the franchisees to the Black Bear Diner marketing fund maintained?
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. All materials used on Grand Opening Advertising shall be subject to Franchisor's approval prior to its use. The Grand Opening Advertising shall be in addition to the Marketing Fund Contribution as required in Section 11.2; however, Franchisee shall receive a credit towards its Local Advertising requirement under Section 11.1.
11.4 Internet Advertising
Franchisor has established and maintains a website on the Internet at the uniform resource locator "http://www.blackbeardiner.com" ("Website") that provides information about the Black Bear Diner restaurant system and the menu items and services that Franchisor and its franchisees provide. Franchisor may (but is not required to) include at the Website an interior page containing information about Franchisee's Franchised Restaurant and other Franchised Restaurants.
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 are maintained in a separate account from the funds of the Franchisor. These funds are not used to cover the Franchisor's general operating expenses, except for reasonable administrative costs related to managing the Marketing Fund.
Franchisees are currently required to contribute 1% of their gross sales weekly to the Marketing Fund, with Black Bear Diner reserving the right to increase this contribution up to 3% of gross sales, providing at least 30 days' written notice. These contributions are made at the same time and in the same manner as royalty fee payments, which are handled through an Electronic Depository Transfer Account. Black Bear Diner also states that each Black Bear Diner restaurant operated by the Franchisor or its affiliates contributes to the Marketing Fund at the same rate as the franchisees.
Black Bear Diner oversees all advertising programs, having sole discretion over the creative aspects, materials, media, and allocation of these resources. While the Franchisor aims to manage the Marketing Fund in a way that benefits all franchisees, it does not guarantee that any specific franchisee will directly or proportionally benefit from the advertising efforts. An annual accounting of the Marketing Fund's operation is prepared and available to franchisees upon request, with Black Bear Diner reserving the right to include an audit by an independent certified public accountant at the Marketing Fund's expense.
The FDD specifies that the Marketing Fund is not a trust, and Black Bear Diner assumes no fiduciary duty in its administration. Although Black Bear Diner intends for the Marketing Fund to be perpetual, it retains the right to terminate the fund, but only after all monies have been spent on advertising and promotional activities or returned to franchisees on a pro rata basis.