Can the Chocolate Bash Marketing Fund be used for administrative and overhead expenses?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
hising has established a Marketing Fund:
- (a) Separate Account. CB Franchising shall hold the Marketing Fund Contributions from all franchisees in one or more bank accounts separate from CB Franchising's other accounts.
- (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).
- (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.
- (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.
- (e) Surplus or Deficit.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the Marketing Fund can be used for administrative and overhead expenses. CB Franchising has the discretion to use the Marketing Fund for marketing, advertising, and public relations, including related overhead.
This includes activities such as developing advertising and promotions, sponsorships, contests, branding, website maintenance, social media, e-commerce, search engine optimization, market research, public relations, trade shows, printing, mailing, and administrative and overhead expenses related to the Marketing Fund. These expenses can also include compensation for Chocolate Bash's employees working on marketing and for accounting, bookkeeping, reporting, and legal expenses related to the Marketing Fund.
It's important to note that Chocolate Bash has sole discretion over how the Marketing Fund is spent, and these expenditures do not need to be proportionate to a franchisee's contributions or provide any direct benefit to the franchisee. Chocolate Bash is also not obligated to have all Chocolate Bash businesses contribute to the Marketing Fund or contribute the same amount. This means that franchisees may be required to contribute to the fund without seeing direct or equal benefits in their specific location.
Chocolate Bash will provide an unaudited annual financial statement of the Marketing Fund within 120 days of the close of their fiscal year, which will be available to franchisees upon request. This provides a degree of transparency, allowing franchisees to review how the funds are being managed and spent.