factual

Can the Browns Chicken Advertising Fund invest any surplus for future use?

Browns_Chicken Franchise · 2025 FDD

Answer from 2025 FDD Document

The Advertising Fund is not Brown's asset. Although the Advertising Fund is not a trust, Brown will hold all Advertising Fund contributions for the benefit of the contributors and use contributions only for the purposes described in this Agreement. Brown does not owe any fiduciary obligation to Franchisee for administering the Advertising Fund or for any other reason. The Advertising Fund shall be accounted for separately from the other funds of Brown and shall not be used to defray any of Brown's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Brown may incur in activities reasonably related to the administration of the Advertising Fund and its advertising programs (including, without limitation, conducting market research, preparing advertising and marketing materials and collecting and accounting for contributions to the Advertising Fund). Brown may spend in any fiscal year an amount greater or less than the aggregate contribution of BROWN'S Stores to the Advertising Fund in that year and the Advertising Fund may borrow from Brown or other lenders to cover deficits of the Advertising Fund or cause the Advertising Fund to invest

any surplus for future use by the Advertising Fund. Franchisee authorizes Brown to collect for remission to the Advertising Fund any advertising monies or credits offered by any supplier to Franchisee based upon purchases by Franchisee. All interest earned on monies contributed to the Advertising Fund will be used to pay advertising costs of the Advertising Fund before other assets of the Advertising Fund are expended. A statement of monies collected and costs incurred by the Advertising Fund shall be prepared annually by Brown and shall be furnished to Franchisee upon written request.

Source: Item 22 — Contracts (FDD page 43)

What This Means (2025 FDD)

According to Browns Chicken's 2025 Franchise Disclosure Document, the Advertising Fund may invest any surplus for future use. Browns Chicken will hold all Advertising Fund contributions for the benefit of the contributors and use contributions only for the purposes described in the franchise agreement. The Advertising Fund will be accounted for separately from Browns Chicken's other funds and will not be used to defray Browns Chicken's general operating expenses, except for reasonable salaries, administrative costs, and overhead related to administering the Advertising Fund and its advertising programs.

Browns Chicken may spend more or less than the aggregate contribution of Browns Chicken stores to the Advertising Fund in any fiscal year. The Advertising Fund may borrow from Browns Chicken or other lenders to cover deficits. All interest earned on monies contributed to the Advertising Fund will be used to pay advertising costs of the Advertising Fund before other assets of the Advertising Fund are expended.

This arrangement benefits Browns Chicken franchisees because it allows the advertising fund to grow and adapt to changing market conditions. The ability to invest surplus funds ensures that the advertising fund can continue to support marketing efforts even during periods of economic downturn or increased competition. Additionally, the use of interest earned on contributions to cover advertising costs helps to maximize the impact of franchisee contributions.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.