Can the Chocolate Bash Marketing Fund be used for other events?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
If CB Franchising 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 the 2024 Chocolate Bash Franchise Disclosure Document, the Marketing Fund can be used for trade shows and other events. CB Franchising uses the Marketing Fund for marketing, advertising, and public relations programs at the local, regional, national, and international levels. These activities include the development and placement of advertising and promotions, sponsorships, contests, and sweepstakes. The fund also covers the development of décor, trade dress, Marks, branding, brand websites, social media, internet activities, e-commerce programs, and search engine optimization. Additionally, the Marketing Fund can be used for market research, public relations, media or agency costs, trade shows and other events, printing and mailing, and administrative and overhead expenses related to the fund, including employee compensation and accounting expenses.
The Franchise Disclosure Document specifies that CB Franchising has the 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. This means that while franchisees contribute to the Marketing Fund, Chocolate Bash ultimately decides how the money is allocated across various marketing initiatives.
Chocolate Bash may accumulate funds in the Marketing Fund and carry the balance over to subsequent years. If the Marketing Fund operates at a deficit or requires additional funds, CB Franchising may loan such funds to the Marketing Fund on reasonable terms. Franchisees are entitled to receive an unaudited annual financial statement of the Marketing Fund within 120 days of the close of CB Franchising's fiscal year, upon request.