What is the purpose of the Chocolate Bash Marketing Fund?
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 at the local, regional, national, and international levels. These efforts encompass the development and placement of advertising and promotions, sponsorships, contests, sweepstakes, and the creation and upkeep of brand-related elements like décor, trade dress, Marks, and branding. The fund also supports website and social media management, internet activities, e-commerce programs, search engine optimization, market research, media costs, trade shows, printing, mailing, and administrative overhead related to these marketing activities.
Chocolate Bash has complete discretion over how the Marketing Fund is spent, and these expenditures do not need to be directly proportionate to a franchisee's contributions or provide any specific benefit to the franchisee. The brand is not obligated to ensure that all Chocolate Bash businesses contribute to the fund, or that those who do contribute pay the same amount or rate as any particular franchisee. This means that franchisees may be required to contribute to the Marketing Fund even if they do not directly benefit from specific marketing campaigns or initiatives.
Chocolate Bash may accumulate surplus 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, Chocolate Bash has the option to loan funds to the Marketing Fund on reasonable terms. Franchisees can request an unaudited annual financial statement of the Marketing Fund within 120 days of the close of Chocolate Bash's fiscal year, allowing them to review how the funds are being managed and spent.
In addition to the Marketing Fund, Chocolate Bash may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative exists for the area encompassing a franchisee's location, the franchisee must become a member. These Market Cooperatives focus on administering regional advertising and marketing programs and developing standardized promotional materials for local advertising and promotion, subject to Chocolate Bash's approval. Franchisees should inquire about the existence and requirements of any Market Cooperatives relevant to their location to understand additional marketing obligations and opportunities.