How much written notice will Burros Fries provide before increasing the System Advertising Fee?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee will pay a System Advertising Fee equal to one percent (1%) to three percent (3%) of Gross Revenues per calendar month to be paid in the same manner as the royalty obligation that begins immediately once the Business is open for operation and continues for the term of the Agreement (as defined in Section 10.A). The System Advertising Fee will commence at one percent (1%) and can be increased by us annually by no more than 1% upon 90 days' written notice to you and shall not exceed 3% of Gross Revenue per month for the term of the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, Burros Fries may increase the System Advertising Fee annually by no more than 1%, provided they give franchisees at least 90 days' written notice. The System Advertising Fee is initially set between 1% and 3% of Gross Revenues per calendar month.
This means that Burros Fries franchisees will receive a written notification at least three months in advance if Burros Fries decides to increase the advertising fee. This advance notice allows franchisees time to prepare for the change in expenses and adjust their financial planning accordingly.
The advertising fee can increase from 1% to a maximum of 3% of gross revenues during the term of the Franchise Agreement. This fee is used for technology or new product development, kitchen equipment development, and national advertising or public relations programs to promote the Burros Fries brand. The fund may also be used for local franchisee group advertising or marketing and Franchisee advisory council expenses; local, regional, national or international advertising or marketing; administration of advertising and marketing (including salaries, accounting, collection, legal and other costs), related expenses and any media (including media production costs) or agency costs.
It is important for prospective franchisees to understand that while the advertising fee can increase, it is capped at 3% of gross revenue. Franchisees should factor in potential increases to the advertising fee when projecting their operating expenses and profit margins. They should also inquire about the franchisor's plans for the advertising fund and how it will benefit franchisees.