Can the Chocolate Bash Marketing Fund be used at the international level?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 22: CONTRACTS]
- (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.
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 at the international level. CB Franchising has the discretion to use the Marketing Fund for marketing, advertising, and public relations materials, programs, and campaigns at the local, regional, national, and/or international level.
This means that a portion of the money contributed to the Marketing Fund by Chocolate Bash franchisees could be used for advertising campaigns that extend beyond the franchisee's local or national market. These activities and expenses are determined reasonable by Chocolate Bash and can include development and placement of advertising and promotions, sponsorships, development of branding, website maintenance, social media, internet activities, market research, public relations, trade shows, and administrative expenses related to the Marketing Fund.
However, the FDD also states that expenditures from the Marketing Fund do not need to be proportionate to a franchisee's contributions or provide any direct or indirect benefit to the franchisee. This means that while the Marketing Fund can be used internationally, there is no guarantee that a franchisee will directly benefit from these international campaigns. The Marketing Fund will be spent at CB Franchising's sole discretion, and CB Franchising has no fiduciary duty regarding the Marketing Fund.