Is CB Franchising obligated to establish a Chocolate Bash Marketing Fund?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
(d) Marketing. CB Franchising shall manage the Marketing Fund.
(b) Use.
CB Franchising shall use the Marketing Fund only for marketing, advertising, and public relations materials, programs and campaigns (including at local, regional, national, and/or international level), and related overhead.
The foregoing includes such activities and expenses as CB Franchising reasonably determines, and may include, without limitation: development and placement of advertising and promotions; sponsorships; contests and sweepstakes; development of décor, trade dress, Marks, and/or branding; development and maintenance of brand websites; social media; internet activities; e-commerce programs; search engine optimization; market research; public relations, media or agency costs; trade shows and other events; printing and mailing; and administrative and overhead expenses related to the Marketing Fund (including the compensation of CB Franchising's employees working on marketing and for accounting, bookkeeping, reporting, legal and other expenses related to the Marketing Fund).
- (d) Contribution by Other Outlets.
CB Franchising is not obligated to (i) have all other Chocolate Bash businesses (whether owned by other franchisees or by CB Franchising or its
affiliates) contribute to the Marketing Fund, or (ii) have other Chocolate Bash businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as Franchisee.
- (c) Discretion.
Franchisee agrees that expenditures from the Marketing Fund need not be proportionate to contributions made by Franchisee or provide any direct or indirect benefit to Franchisee.
The Marketing Fund will be spent at CB Franchising's sole discretion, and CB Franchising has no fiduciary duty with regard to the Marketing Fund.
- (f) Financial Statement.
CB Franchising will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of CB Franchising's fiscal year and will provide the financial statement to Franchisee upon request.
- "Marketing Fund" means the fund established (or which may be established) by CB Franchising into which Marketing Fund Contributions are deposited.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash FDD, CB Franchising is not obligated to establish a Marketing Fund. However, the FDD does define what the "Marketing Fund" means, stating that it is the fund established (or which may be established) by CB Franchising into which Marketing Fund Contributions are deposited.
If a Marketing Fund is established, CB Franchising will manage it and use it only for marketing, advertising, and public relations materials, programs, and campaigns. These activities and expenses are determined at CB Franchising's discretion and may include development and placement of advertising and promotions, sponsorships, contests and sweepstakes, development of décor, trade dress, Marks, and/or branding, development and maintenance of brand websites, social media, internet activities, e-commerce programs, search engine optimization, market research, public relations, media or agency costs, trade shows and other events, printing and mailing, and administrative and overhead expenses related to the Marketing Fund, including employee compensation and accounting and legal expenses.
CB Franchising is not obligated to have all Chocolate Bash businesses contribute to the Marketing Fund or contribute the same amount or rate. The expenditures from the Marketing Fund do not need to be proportionate to the franchisee's contributions and will be spent at CB Franchising's sole discretion, without any fiduciary duty. CB Franchising will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of CB Franchising's fiscal year and will provide it to the franchisee upon request.