Does a Cd One Price Cleaners franchisee have to contribute to the Marketing Fund?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's franchise agreements also require the payment of marketing fees, which are intended to reimburse the Company for expenses associated with advertising and marketing programs. Marketing fund fees, which are a percentage of revenues of each franchised entity, are recognized as revenue when the underlying sales occur.
1. Summary of Significant Accounting Policies (cont'd)
Marketing Fund – The Company administers a marketing fund on behalf of the franchise and affiliate-owned locations to develop and execute advertising and sales promotion programs. There were no affiliate-owned locations at December 29, 2023 (one at December 30, 2022). Each location is required to contribute the amount that the Company periodically specifies, not to exceed three percent (3%) of revenue. The Company has the right at any time to terminate the marketing fund upon written notice. All unspent monies on the date of the termination shall be distributed to franchise and affiliate-owned locations in proportion to their respective contributions to the marketing fund during the preceding twelve-month period. For each of the twelve months during fiscal 2023 and 2022, the required contribution rate was three percent (3%).
Source: Item 22 — Contracts (FDD page 72)
What This Means (2025 FDD)
According to the 2025 Cd One Price Cleaners FDD, franchisees are required to contribute to the Marketing Fund. Each Cd One Price Cleaners location must contribute an amount that the company specifies periodically, but this amount cannot exceed three percent (3%) of the location's revenue. The purpose of this fund is to develop and execute advertising and sales promotion programs for both franchised and affiliate-owned locations.
Cd One Price Cleaners retains the right to terminate the marketing fund at any time by providing written notice. If the fund is terminated, any unspent money will be distributed to both franchise and affiliate-owned locations. The distribution will be proportional to each location's contribution to the marketing fund over the twelve-month period preceding the termination.
For franchisees offering Pickup and Delivery (PUD) services, there are additional marketing fund contributions. These include a standard contribution under Section 9.3 of the Franchise Agreement, plus additional contributions for Customer Acquisition Payments (3.5% of Gross PUD Revenue) and Customer Development and Retention Payments (2% of Gross PUD Revenue). These additional contributions are specifically tied to the revenue generated by the PUD services, ensuring that marketing efforts are supported for this specific service offering.