How is the Brand Development Fund Fee determined for C3 Wellness Spa franchisees?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
tive fee for Franchisor's expenses in so acting, shall be immediately payable by Franchisee to Franchisor upon demand. The foregoing remedies are in addition to any other remedies Franchisor may have under this Agreement, at law, or in equity.
ARTICLE 9 BRAND DEVELOPMENT AND MARKETING
Franchisor is not required to conduct any marketing on behalf of Franchisee or the System.
9.A. BRAND DEVELOPMENT FUND
At all times and from time to time, as determined by Franchisor, in Franchisor's Reasonable Business Judgment, Franchisor may institute, implement, maintain, delegate and administer a brand development fund (the "Brand Development Fund"). The following shall apply to the Brand Development Fund at all times throughout the Term:
- (1) If Franchisor institutes the Brand Development Fund, Franchisee shall pay, on the Due Date, a mandatory and continuing fee to the Brand Development Fund in an amount equal to a percentage of Gross Sales (as determined and designated by Franchisor in Franchisor's Reasonable Business Judgment) for each weekly Accounting Period (the "Brand Development Fund Fee"), provided, however, Franchisee will not be required to contribute more than the lesser of: (i) 3% of the Gross Sales of the Franchised Business; or (ii) $2,300 for each weekly Accounting Period;
- (2) Franchisor will provide Franchisee with written notice of the percentage of Gross Sales that Franchisee is required to contribute to the Brand Development Fund. Upon such written notice to Franchisee, the percentage of Gross Sales to be paid by Franchisee to the Brand Development Fund will be applicable for each and every weekly Accounting Period thereafter during the Term until otherwise designated by Franchisor in writing. The Brand Development Fund Fee shall be paid to Franchisor on the Due Date and in accordance with the payment terms and methods set forth in Article 5.B for the payment of Royalty Fees;
- (3) Franchisor, in Franchisor's Reasonable Business Judgment, shall direct all advertising, media placement, marketing and public relations programs and activities financed by the Brand Development Fund, with sole discretion over the strategic direction, creative concepts, materials, and endorsements used by the Brand Development Fund, and the geographic, market, and media placement and allocation thereof. Without limiting the foregoing, the Brand Development Fund may also be utilized for evaluation and monitoring of the Business Management Systems, maintenance and upgrades to the System Website, and development of Digital Media;
- (4) Franchisee agrees that the purpose of the advertising, media, marketing and activities financed by the Brand Development Fund is and shall be for the general enhancement of the System brand as associated with the Licensed Marks and general public brand recognition and awareness of the Licensed Marks.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, the Brand Development Fund Fee is a mandatory and ongoing fee. The franchisee must pay this fee to the Brand Development Fund on the due date. The amount is a percentage of Gross Sales, determined and designated by C3 Wellness Spa in its reasonable business judgment, for each weekly accounting period.
However, the franchisee will not be required to contribute more than the lesser of two options: either 3% of the Gross Sales of the franchised business or $2,300 for each weekly accounting period. C3 Wellness Spa will provide the franchisee with written notice of the specific percentage of Gross Sales that the franchisee is required to contribute to the Brand Development Fund. This percentage will then apply to each weekly accounting period throughout the term, unless C3 Wellness Spa designates otherwise in writing.
C3 Wellness Spa has the discretion to direct all advertising, media placement, marketing, and public relations programs and activities financed by the Brand Development Fund. This includes strategic direction, creative concepts, materials, endorsements, and the geographic, market, and media placement and allocation of these efforts. The Brand Development Fund may also be used for evaluating and monitoring the Business Management Systems, maintaining and upgrading the System Website, and developing Digital Media.
It's important to note that C3 Wellness Spa is not obligated to ensure that expenditures by the Brand Development Fund in any geographic area are proportionate to the contributions from C3 Wellness Spa locations operating in that area. Additionally, there's no guarantee that any C3 Wellness Spa location will directly benefit from the development of advertising and marketing materials in proportion to its contribution to the Brand Development Fund.