Can Bombs Away require franchisees to participate in advertising campaigns?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
instructions from Bombs Away Franchising or the vendor, supplier, or manufacturer of such item with respect to such item, including without limitation the recall, repair, and/or replacement of such item.
ARTICLE 9. MARKETING
- 9.1 Approval and Implementation. Franchisee shall not conduct any marketing, advertising or public relations activities (including websites, online advertising, social media marketing or presence, and sponsorships) that have not been approved by Bombs Away Franchising. Bombs Away Franchising may (but is not obligated to) operate all "social media" accounts on behalf of the System, or it may permit franchisees to operate one or more accounts. Franchisee must comply with any System Standards regarding marketing, advertising, and public relations, include any social media policy that Bombs Away Franchising may prescribe. Franchisee shall implement any marketing plans or campaigns determined by Bombs Away Franchising.
- 9.2 Use By Bombs Away Franchising. 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.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees are required to implement marketing plans or campaigns determined by Bombs Away. Bombs Away may also establish a Marketing Fund to promote the system at various levels and may establish market advertising cooperatives in geographical areas, requiring franchisees to become members.
Franchisees must get approval from Bombs Away for all marketing, advertising, and public relations activities. Bombs Away has the right to use any marketing materials developed by the franchisee. The Marketing Fund will be used for marketing, advertising, and public relations, and Bombs Away has sole discretion over how the fund is spent. Franchisees agree that the expenditure from the Marketing Fund does not need to be proportionate to their contribution or provide any direct benefit to them.
If a Market Cooperative is established for the franchisee's area, the franchisee must become a member. These cooperatives focus on regional advertising and marketing programs, with all plans and materials requiring Bombs Away's approval. The cooperatives are funded by member dues, which are determined by a majority vote but must be between 1% and 5% of gross sales. Bombs Away also requires franchisees to spend at least 5% of gross sales each month on marketing the business, with Bombs Away having the sole discretion to determine what activities constitute marketing. Contributions to a Market Cooperative may count toward this required spending.
These stipulations mean that Bombs Away franchisees have limited control over marketing and advertising strategies, and must adhere to the franchisor's decisions. Franchisees are obligated to participate in marketing campaigns and contribute financially, both through direct spending and potential cooperative dues. Prospective franchisees should consider the financial implications of these requirements and the limited control they have over marketing efforts.