What is the purpose of the 'Marketing Fund' for Bombs Away franchisees?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
sing.** Bombs Away Franchising may use any marketing materials or campaigns developed by or on behalf of Franchisee, and Franchisee hereby grants an unlimited, perpetual, royalty-free license to Bombs Away Franchising for such purpose.
- 9.3 Marketing Fund. Bombs Away Franchising may establish a Marketing Fund to promote the System on a local, regional, national, and/or international level. If Bombs Away Franchising has established a Marketing Fund:
- (a) Separate Account. Bombs Away Franchising shall hold the Marketing Fund Contributions from all franchisees in one or more bank accounts separate from Bombs Away Franchising's other accounts.
- (b) Use. Bombs Away Franchising shall use the Marketing Fund only for marketing, advertising, and public relations materials, programs and campaigns (including at local, regional, national, and/or international level), and related overhead. The foregoing includes such activities
and expenses as Bombs Away Franchising reasonably determines, and may include, without limitation: development and placement of advertising and promotions; sponsorships; contests and sweepstakes; development of décor, trade dress, Marks, and/or branding; development and maintenance of brand websites; social media; internet activities; e-commerce programs; search engine optimization; market research; public relations, media or agency costs; trade shows and other events; printing and mailing; and administrative and overhead expenses related to the Marketing Fund (including the compensation of Bombs Away Franchising's employees working on marketing and for accounting, bookkeeping, reporting, legal and other expenses related to the Marketing Fund).
- (c) Discretion. Franchisee agrees that expenditures from the Marketing Fund need not be proportionate to contributions made by Franchisee or provide any direct or indirect benefit to Franchisee. The Marketing Fund will be spent at Bombs Away Franchising's sole discretion, and Bombs Away Franchising has no fiduciary duty with regard to the Marketing Fund.
- (d) Contribution by Other Outlets. Bombs Away Franchising is not obligated to (i) have all other Bombs Away businesses (whether owned by other franchisees or by Bombs Away Franchising or its affiliates) contribute to the Marketing Fund, or (ii) have other Bombs Away businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as Franchisee.
- (e) Surplus or Deficit. Bombs Away Franchising may accumulate funds in the Marketing Fund and carry the balance over to subsequent years. If the Marketing Fund operates at a deficit or requires additional funds at any time, Bombs Away Franchising may loan such funds to the Marketing Fund on reasonable terms.
- (f) Financial Statement. Bombs Away Franchising will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of Bombs Away Franchising's fiscal year and will provide the financial statement to Franchisee upon request.
- 9.4 Market Cooperatives. Bombs Away Franchising may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative for the geographic area encompassing the Territory has been established at the time Franchisee commences operations hereunder, Franchisee shall immediately become a member of such Market Cooperative.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the Marketing Fund is used to promote the Bombs Away system at the local, regional, national, and/or international level. Bombs Away uses the fund for marketing, advertising, and public relations materials, programs, and campaigns, including related overhead. These activities and expenses may include development and placement of advertising and promotions; sponsorships; contests and sweepstakes; development of décor, trade dress, Marks, and/or branding; development and maintenance of brand websites; social media; internet activities; e-commerce programs; search engine optimization; market research; public relations, media or agency costs; trade shows and other events; printing and mailing; and administrative and overhead expenses related to the Marketing Fund, including employee compensation and accounting/legal expenses. Bombs Away holds the Marketing Fund contributions in one or more bank accounts separate from its other accounts.
Bombs Away franchisees are required to contribute to the Marketing Fund. Franchisees must pay a Marketing Fund Contribution equal to 2% of their Gross Sales (or a lesser amount determined by Bombs Away), at the same time as the Royalty Fee. Bombs Away has sole discretion over how the Marketing Fund is spent, and the expenditures do not need to be proportionate to a franchisee's contributions or provide any direct benefit to the franchisee. Bombs Away is not obligated to have all Bombs Away businesses contribute to the Marketing Fund, or contribute the same amount.
Bombs Away may accumulate funds in the Marketing Fund and carry the balance over to subsequent years, and may loan funds to the Marketing Fund if it operates at a deficit. Bombs Away will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of its fiscal year and will provide the financial statement to franchisees upon request. In addition to the Marketing Fund, Bombs Away may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. Franchisees may also be required to spend at least 5% of Gross Sales each month on local marketing for their Business.