What is the obligation of a Brueggers Bagels franchisee regarding the Marketing Contribution?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
nate the Development Agreement, and by cross-default, any other Franchise Agreements.
Advertising
Under the Franchise Agreement, you have a required weekly Marketing Contribution equal to 3.5% of the Gross Sales of your Bakery during the preceding Accounting Week. Franchisees who entered the Bruegger's system before you (or who enter after you) may have different obligations, depending on their form of Franchise Agreement. There is no required Marketing Contribution under the License Agreement.
We have the right to allocate your Marketing Contribution in the proportion that we designate among the following: (a) the Systemwide Marketing Fund ("SMF"); (b) any Marketing Co-op we establish for your area (but we are not required to establish a Marketing Co-op for any area); and (c) local store marketing ("LSM"). Although likely to change, we presently allocate the Marketing Contribution as follows:
- We collect 50% of the Marketing Contribution (that is, 1.75% of your Gross Sales) for the SMF; and
- You must spend 50% of the Marketing Contribution (that is, 1.75% of your Gross Sales) on LSM.
SMF. The SMF is a common fund for the advertising and promotion of Bruegger's Bakeries. There is no contractual obligation for Company-owned Bakeries to contribute to the SMF. Company-owned Bakeries have contributed at times in the past, but our current policy is that they do not contribute.
We have the right to direct all advertising, media placement, marketing and public relations programs and activities financed by the SMF, with final discretion over strategic direction, creative concepts, materials and endorsements used, and the geographic, market and media placement and allocation. We may use the SMF to pay various costs and expenses as we determine, including: preparation and production of video, audio, written, and online advertising materials; production of promotional materials; sponsorship of sporting, charitable, or similar events; design, establishment, and maintenance of websites, search rankings, social media profiles and other online and mobile presence; endorsement contracts; reasonable salaries and expenses of our and our affiliates' employees working for or on behalf of the SMF or on advertising, marketing, public relations, materials, programs, activities or promotions prepared, planned or undertaken on behalf of the SMF; professional fees and administrative costs and overhead incurred in activities reasonably related to the administration and activities of the SMF (including accounting fees, legal fees, and interest on monies borrowed by the SMF); implementation of advertising programs, including purchasing direct mail and media advertising and employing advertising agencies to assist us; and other public relations, marketing, consumer research, and promotional activities, including testing and test marketing programs, fulfillment charges, and development and implementation and testing of trade dress and design prototypes.
We have no obligation to spend any specific portion of the SMF in the geographic area of your Bakery.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, MANUALS AND TRAINING (FDD pages 32–42)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, franchisees are obligated to make a weekly Marketing Contribution equivalent to 3.5% of their Bakery's Gross Sales from the preceding Accounting Week. However, the FDD notes that franchisees who entered the Brueggers Bagels system before or after may have different obligations based on their specific Franchise Agreement.
The Marketing Contribution is allocated as follows: 50% (1.75% of Gross Sales) is designated for the Systemwide Marketing Fund (SMF), and the other 50% (1.75% of Gross Sales) must be spent on Local Store Marketing (LSM). Brueggers Bagels retains the right to adjust this allocation. The SMF is used for advertising and promotion of Brueggers Bagels Bakeries, and while Company-owned Bakeries are not contractually obligated to contribute, they may have done so in the past.
Brueggers Bagels has the right to establish co-marketing programs, joint marketing efforts, and local or regional Marketing Co-ops. If a Marketing Co-op is applicable to a franchisee's Bakery, membership and contribution are mandatory, but franchisees will not have to contribute to more than one Marketing Co-op for the same Bakery at the same time. Brueggers Bagels may grant exemptions from Marketing Co-op membership under certain circumstances.
While franchisees are presently required to spend LSM funds directly, Brueggers Bagels reserves the right to collect and manage these funds. In such cases, they will seek the franchisee's input on how the funds should be spent, but ultimately, Brueggers Bagels has the final say in directing the expenditure of these funds. Franchisees are also required to conduct grand opening marketing activities, with a current expenditure of $10,000, and Brueggers Bagels reserves the right to manage these funds for franchised Bakeries.