If a Franchisee transfers their Bojangles franchise, how does this affect their obligations under the Advertising Expense Sharing Agreement?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
No Initial Franchisee shall be entitled to make any transfer of Restaurants from one DMA to another hereunder unless such Initial Franchisee shall be current in its obligations to make DMA contributions at the time of such transfer.
NONELIGIBLE DMAs: Any DMA which is not an Eligible DMA under this Agreement will not carry out any of the functions called for herein until such time as it may become an Eligible DMA, and no Franchisee shall have any duties or obligations hereunder in respect to any Restaurants owned by him in such DMA unless and until such Restaurants be transferred under the terms hereunder to an Eligible DMA of which such Franchisee is a member.
FRANCHISOR'S RIGHT TO DISCONTINUE DMA ADVERTISING: Notwithstanding the provisions of this Agreement, Franchisor may in its discretion discontinue the operation of cooperative advertising programs within the DMA and require the return of all funds to each respective contributor to the extent these funds have not been expended or obligations created.
Mandatory discontinuance of cooperative advertising within a DMA may be
implemented by Franchisor upon written notice to each Member. If Franchisor shall require discontinuance of DMA advertising the Chairman shall promptly return all funds of DMA Members to each contributor except for those funds necessary to pay obligations incurred to pay for advertising within the DMA. Nothing in this Agreement shall limit Franchisor's rights under the terms of any franchise agreement or other agreement pertaining to any franchisee which is a Member under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
Based on the 2025 Bojangles Franchise Disclosure Document, the obligations of a franchisee under the Advertising Expense Sharing Agreement are affected by the transfer of restaurants from one Designated Market Area (DMA) to another. Specifically, an initial franchisee must be current on their DMA contributions at the time of such a transfer.
Furthermore, if a DMA is not an Eligible DMA under the agreement, it will not carry out any advertising functions, and franchisees have no obligations concerning restaurants they own in that DMA. These obligations only begin if and when the restaurants are transferred to an Eligible DMA where the franchisee is a member. This implies that franchisees are only required to contribute to advertising efforts in areas where their restaurants are located and where advertising programs are active.
Bojangles also retains the right to discontinue cooperative advertising programs within a DMA, which would involve returning unspent funds to the contributors. This discontinuation can be implemented with written notice to each member. However, this right does not limit Bojangles's rights under any franchise agreement or other agreement pertaining to any franchisee who is a member under the Advertising Expense Sharing Agreement. This clause ensures that Bojangles maintains control over advertising strategies and fund allocation, while also retaining its rights under existing agreements with franchisees.