What is the range of the System Advertising contribution that a Burros Fries franchisee must pay?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
- (i.) You will pay us one to three percent (1%-3%) of Gross Revenues per calendar month for the System Advertising contribution, paid to us, as designated in the Franchise Agreement.
We may raise, discontinue or reduce the contribution but the increase will not exceed 1% per year upon 90 days' written notice to you and shall not exceed 3% of Gross Revenue per month but your total contribution will not exceed three percent (3%) of your Gross Revenue in any calendar year for the term of the Agreement.
You will begin at one percent (1%) per year if and when the program is established.
Contributions are due by the fifth (5th) day of the month (for the prior month) which will start immediately once your Business is open for operation then continues for the term of your Franchise (as described in Item 6).
Refer to Item 6 for definition of Gross Revenue.
- (ii.) The contributions will be accounted for separately from our other funds and will not be used to defray any of our general operating expenses, except for such reasonable salaries, administrative costs, travel expenses and overhead as we may incur in activities related to the administration of the Fund and its programs, including conducting evaluation of new products, new menu or retail items, kitchen equipment and technologies; product development, market research, preparing advertising, promotion and marketing materials, and collecting and accounting for contributions to the Fund.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–38)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, franchisees are required to contribute to the System Advertising Fund. This contribution ranges from one to three percent (1%-3%) of Gross Revenues per calendar month. This payment is made to Burros Fries, as specified in the Franchise Agreement.
The FDD specifies that Burros Fries has the discretion to adjust the contribution amount, but increases are capped at 1% per year with a 90-day written notice to the franchisee. Regardless of any annual increases, the total contribution will not exceed 3% of Gross Revenue per month or in any calendar year for the term of the Franchise Agreement.
Franchisees will start contributing at a rate of one percent (1%) per year once the Burros Fries business is open and operating. These contributions are due by the fifth day of each month for the previous month and continue throughout the franchise term. The contributions are kept separate from Burros Fries' other funds and are used for activities such as salaries, administrative costs, travel expenses, overhead, product development, market research, and preparing advertising and marketing materials.