What is the 'Marketing Fund' used for in the Chocolate Bash franchise system?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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.
CB Franchising 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 at any time, CB Franchising may loan such funds to the Marketing Fund on reasonable terms.
- (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.
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 is used for marketing, advertising, and public relations initiatives. These initiatives can occur at the local, regional, national, or even international level. The fund covers a wide array of activities and related overhead expenses that Chocolate Bash deems reasonable.
Specifically, the Marketing Fund may be used for the development and placement of advertising and promotions, sponsorships, contests, sweepstakes, and the development of décor, trade dress, Marks, and branding. It also includes the development and maintenance of brand websites, social media activities, internet activities, e-commerce programs, and search engine optimization. Furthermore, the fund can cover 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 expenses.
It is important to note that Chocolate Bash has sole discretion over how the Marketing Fund is spent, and expenditures do not need to be proportionate to a franchisee's contributions or provide any direct benefit to the franchisee. Chocolate Bash is not obligated to ensure that all Chocolate Bash businesses contribute to the fund or contribute at the same rate as the franchisee. Chocolate Bash may also accumulate funds in the Marketing Fund and carry the balance over to subsequent years, or loan funds to the Marketing Fund if it operates at a deficit. Franchisees are entitled to an unaudited annual financial statement of the Marketing Fund upon request, within 120 days of the close of Chocolate Bash's fiscal year.