Can the Chocolate Bash Marketing Fund be used at the national level?
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
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 at the national level. CB Franchising has the discretion to use the Marketing Fund for marketing, advertising, and public relations at the local, regional, national, and/or international level. This includes the development and placement of advertising and promotions, sponsorships, and the development and maintenance of brand websites.
This means that Chocolate Bash franchisees contribute to a Marketing Fund that may be used for broad, national campaigns, which could increase brand awareness and potentially drive customers to individual franchise locations. However, the FDD also states that expenditures from the Marketing Fund do not need to be proportionate to a franchisee's contributions, nor do they need to provide any direct or indirect benefit to the franchisee. Therefore, franchisees may not see an immediate or direct return on their contributions.
CB Franchising has sole discretion over how the Marketing Fund is spent and does not have a fiduciary duty regarding the fund. This gives Chocolate Bash significant control over the Marketing Fund's use. While this allows for flexibility in marketing strategies, it also means franchisees have limited input on how their contributions are used. Franchisees can request an unaudited annual financial statement of the Marketing Fund to see how the funds are being allocated.