How does Chicken Guy collect, administer, and spend monies for advertising purposes?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
e Agreement, § 14.D.)
Advertising
Weekly Marketing Obligation
During the term of the Franchise Agreement, your Weekly Marketing Obligation will not exceed 5% of the Gross Sales of the Franchised Restaurant. We may allocate the Weekly Marketing Obligation at our discretion between the Brand Fund (when established), a Regional Advertising Fund (or Regional Coop) (if established), and/or your Local Store Marketing. Currently, your Weekly Marketing Obligation is 4% of Gross Sales of the Franchised Restaurant, all of which is allocated to your Local Store Marketing. When the Brand Fund is established, the Weekly Marketing Obligation shall consist of 2% of Gross Sales to the Brand Fund (subject to a maximum annual contribution of $30,000) and 2% of Gross Sales to your Local Store Marketing. We have the right, following written notice to you, to increase and reallocate the Weekly Marketing Obligation among the Brand Fund, a Regional Advertising Fund (or Regional Co-Op) and/or Local Store Marketing.
Brand Fund
We plan to establish the Chicken Guy! Brand Fund ("Brand Fund"). When established, you must contribute 2% of weekly Gross Sales of the Franchised Restaurant to the Brand Fund up to a maximum annual contribution of $30,000. We will have sole discretion to use the Brand Fund, and the monies in the Brand Fund, for any purpose that we believe will enhance, protect, and increase public recognition and perception of the System and Proprietary Marks. We will direct all programs that the Brand Fund finances, with sole control over the creative concepts, materials, and endorsements used and their geographic, market, and media placement and allocation. You must participate in all advertising, marketing, promotions, research and public relations programs instituted by the Brand Fund.
Among the programs, concepts, and expenditures for which we may utilize the Brand Fund monies are: (1) creative development and production of print ads, commercials, radio spots, point of purchase materials, direct mail pieces, door hangers, and other advertising and marketing materials; (2) creative development, preparation, production and placement of video, audio, and written materials and electronic media; (3) media placement and buying, including all associated expenses and fees; (4) administering regional and multi-regional marketing and advertising programs; (5) market research and customer satisfaction surveys, including the use of secret shoppers; (6) the creative development of, and actual production associated with, premium items, giveaways, promotions, contests, public relation events, and charitable or nonprofit events; (7) creative development of signage, posters, and individual restaurant décor items including wall graphics and signage; (8) development and management of a kiosk or truck program; (9) website, extranet and/or intranet development and maintenance; (10) development, implementation, and maintenance of an electronic commerce website and/or related strategies; (11) development and implementation of search engine optimization strategies; (12) development and administration of consumer surveys, interviews and other customer satisfaction and retention policies; (13) retention and payment of advertising and marketing agencies and other outside advisors including retainer and management fees; and (14) public relations and community involvement activities and programs; and (15) real estate analytics and marketing.
Vendors and suppliers also may contribute to the Brand Fund. We may produce materials in house or work with an advertising agency in developing advertising for print, Internet, and other related advertising media. We did not collect or spend any Brand Fund contributions in our last fiscal year ending December 29, 2024.
Regional Advertising
In addition to the Brand Fund (when established), you will pay that portion of the Weekly Marketing Obligation as we direct to any Regional Advertising Fund or, in lieu of a Regional Advertising Fund, a Regional Co-op that we may establish in the geographic area that covers your Franchised Location.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 25–34)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, franchisees are obligated to contribute to marketing and advertising efforts through a Weekly Marketing Obligation, which cannot exceed 5% of the restaurant's gross sales. Currently, this obligation is set at 4% of gross sales, but is allocated entirely to Local Store Marketing. However, Chicken Guy plans to establish a Brand Fund, at which point the Weekly Marketing Obligation will be divided, with 2% of gross sales (up to a maximum annual contribution of $30,000) going to the Brand Fund and 2% remaining for Local Store Marketing. Chicken Guy retains the right to adjust these allocations with written notice.
Chicken Guy, or its designee, has the authority to direct all advertising, marketing, and public relations programs financed by the Brand Fund and any Regional Advertising Fund. This includes complete discretion over creative concepts, materials, endorsements, and the placement and allocation of advertising. The FDD specifies that advertising funded by the Brand Fund, Regional Advertising Funds, or Regional Co-ops must align with Chicken Guy's specified advertising and sales promotions. While Chicken Guy has not yet established any Regional Advertising Funds or Co-ops, they reserve the right to do so in the future. If a Regional Co-op is established, its monies may be spent as determined by a majority vote of the members, with each Chicken Guy! Restaurant having one vote. However, Chicken Guy may assume decision-making authority if the members cannot agree.
Chicken Guy will separately account for the Brand Fund and Regional Advertising Funds but is not required to segregate these funds from their other monies. The advertising funds will not be used for Chicken Guy's general operating expenses, but Chicken Guy and its affiliates may be reimbursed for expenses directly related to the fund's marketing programs, such as market research and preparing advertising materials. Company-operated restaurants contribute to the advertising funds at the same rate as franchised locations. Chicken Guy is not obligated to ensure that advertising expenditures benefit any particular franchisee directly or proportionally to their contribution, nor are they required to spend any amount on advertising in the area where a franchisee's restaurant is located. An unaudited report of each fund's operations will be prepared annually and made available to franchisees upon written request.
For a prospective franchisee, this means that a portion of their gross sales will be allocated to advertising, with the specific amount and allocation subject to change by Chicken Guy. While franchisees have some control over Local Store Marketing, Chicken Guy maintains significant control over the Brand Fund and any Regional Advertising Funds, including how the money is spent and which markets are targeted. The franchisee bears the risk that advertising expenditures may not directly benefit their specific location, and they should carefully consider these factors when evaluating the franchise opportunity.