How are franchisee advertising contributions for Black Bear Diner accounted for?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
tions and public relations activities. Such expenditures shall be made directly by Franchisee. Within thirty (30) days of the end of each month, Franchisee shall furnish to Franchisor an accounting in a form as designated by Franchisor of the expenditures for the preceding month.
Franchisee shall submit to Franchisor, for its prior approval, all advertising and promotional materials to be used by Franchisee including, but not limited to signs, television advertisements, radio spots, coupons, leaflets, flyers, local newspaper, magazine, menu inserts, table cards, direct mail or other print advertising, social media, contests, sports sponsorships and . Franchisor shall use reasonable efforts to provide notice of approval or disapproval within twenty
(20) days from the date all requested material is received by Franchisor. In the event written approval is not received by Franchisee within twenty (20) days of receipt, Franchisor shall be deemed to have not given the required approval. Franchisor reserves the right to disapprove any advertising and promotional materials even if prior approval has been granted.
11.2 Systemwide Marketing Fund
Franchisor has established and administers the Black Bear Diner Systemwide Marketing Fund (the "Marketing Fund"). Currently, Franchisee is required to make a weekly contribution of one percent (1%) of its Gross Sales to the Marketing Fund ("Marketing Fund Contribution"). Franchisor reserves the right increase the amount of the Marketing Fund Contribution but will not increase the amount of the Marketing Fund Contribution to more than 3% of Gross Sales per week and will provide Franchisee with at least thirty (30) days written notice prior to increasing the amount of the Marketing Fund Contribution. Franchisee's Marketing Fund Contribution shall be made at the same time and in the same manner as its Royalty Fee payment. The Marketing Fund shall be maintained and administered by Franchisor or its designee as follows:
Franchisor shall generally oversee all advertising programs with sole discretion over the creative concepts, materials and media used in such programs and the placement and allocation 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 Black Bear Diner's 2025 Franchise Disclosure Document, franchisee advertising contributions are managed through two primary avenues: a Systemwide Marketing Fund and local advertising. Currently, franchisees are required to contribute 1% of their gross sales weekly to the Marketing Fund, although Black Bear Diner retains the right to increase this contribution up to 3% with 30 days' notice. These contributions are to be made in the same manner and at the same time as royalty fee payments, via an Electronic Depository Transfer Account that Black Bear Diner accesses directly.
The funds collected for the Marketing Fund are kept separate from Black Bear Diner's general operating funds. These funds are intended to cover the costs of various advertising efforts, including television, radio, internet, billboard, magazine, and newspaper campaigns, as well as public relations activities and promotional materials. Black Bear Diner, or its designee, has sole discretion over the advertising programs' creative concepts, materials, media placement, and allocation. While Black Bear Diner aims to manage the Marketing Fund in a way that benefits all franchisees, there is no guarantee that any specific franchisee will directly benefit from the advertising efforts.
In addition to the Marketing Fund, franchisees are also required to spend at least 1% of their previous month's gross sales on local advertising, encompassing local marketing, advertising, promotions, and public relations activities. Franchisees must directly manage these expenditures and provide Black Bear Diner with an accounting of these expenses within 30 days of each month's end. Furthermore, franchisees must spend no less than $5,500 on Grand Opening Advertising within a specified timeframe around the restaurant's opening, with all advertising materials subject to Black Bear Diner's approval.
An annual accounting of the Marketing Fund's operation is prepared and made available to franchisees upon request. Black Bear Diner also reserves the right to require an audit of the Marketing Fund by an independent certified public accountant, at the Marketing Fund's expense. It is important to note that the Marketing Fund is not considered a trust, and Black Bear Diner does not assume a fiduciary duty in its administration.