Can the Chocolate Bash Marketing Fund be used for developing branding?
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.
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 the development of branding. CB Franchising has the discretion to use the Marketing Fund for marketing, advertising, and public relations purposes, which includes the development of branding.
The funds can be used for activities such as developing decor, trade dress, marks, and branding. It can also be used for the development and maintenance of brand websites, social media, internet activities, and e-commerce programs. Other uses include 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.
As a Chocolate Bash franchisee, it's important to note that the expenditures from the Marketing Fund do not need to be proportionate to the franchisee's contributions, nor do they need to provide any direct or indirect benefit to the franchisee. CB Franchising has sole discretion over how the Marketing Fund is spent and has no fiduciary duty regarding the fund. Franchisees can request an unaudited annual financial statement of the Marketing Fund within 120 days of the close of CB Franchising's fiscal year.