Is the Chocolate Bash Marketing Fund audited?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
Advertising Fund. You and all other franchisees must contribute to our Marketing Fund. Your contribution is 1% of gross sales per week. We reserve the right to have other franchisees contribute a different amount or at a different rate. Outlets that we own are not obligated to contribute to the Marketing Fund. We administer the fund. The fund is not audited. We will make unaudited annual financial statements available to you upon request.
If less than all marketing funds are spent in the fiscal year in which they accrue, the money will remain in the Marketing Fund to be spent in the next year. In 2023 we spend all the funds collected for the Marketing Fund.
No money from the Marketing Fund is spent principally to solicit new franchise sales.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 19–25)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, the Marketing Fund is not audited. Franchisees are required to contribute 1% of their gross sales per week to the Marketing Fund, while Chocolate Bash-owned outlets are not obligated to contribute. Chocolate Bash administers the fund and will provide franchisees with unaudited annual financial statements upon request.
This lack of an independent audit means that franchisees must rely on the unaudited financial statements provided by Chocolate Bash to understand how the Marketing Fund is being managed and spent. While the FDD states that in 2023, all funds collected for the Marketing Fund were spent, the absence of an audit provides less assurance that the funds are being used appropriately and efficiently.
Prospective franchisees should consider the implications of an unaudited Marketing Fund. It is advisable to carefully review the unaudited annual financial statements, ask detailed questions about the fund's expenditures, and possibly seek advice from a financial professional to assess the transparency and accountability of the Marketing Fund. This is especially important given that franchisees are required to contribute a percentage of their gross sales to the fund, and Chocolate Bash has the right to have franchisees contribute a different amount or at a different rate.