Under what conditions can Black Bear Diner terminate the Marketing Fund?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, Black Bear Diner maintains the right to terminate the Marketing Fund. However, this termination can only occur after all the money in the Marketing Fund has been fully spent on advertising and promotional activities. Alternatively, the funds can be returned to the franchisees on a pro rata basis, meaning each franchisee would receive a portion of the remaining funds proportional to their contributions.
This condition protects franchisees by ensuring that the money they contribute to the Marketing Fund is used for its intended purpose: advertising and promotion. Black Bear Diner cannot simply shut down the fund and keep the remaining money. They must either use it for marketing or return it to the franchisees.
It is common in franchising for franchisors to have the right to terminate a marketing fund, but there are usually stipulations in place to protect franchisees' investments. The stipulation that all funds must be used for advertising or returned to franchisees is a typical safeguard. Franchisees should pay close attention to these terms to understand how their marketing contributions will be handled in all scenarios.