What happens to unspent Brand Funds at the end of the fiscal year for Chocolate Fish Coffee?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You and all other franchisees must contribute to our Brand Fund. Your contribution is 1% of gross sales per week. We reserve the right to have other franchisees contribute a different amount or at a different rate. Outlets that we own are not obligated to contribute to the Brand Fund. We administer the fund. The fund is not audited. We will make unaudited annual financial statements available to you upon request.
Because we are a new franchisor, we did not spend any money from the Brand Fund in our most recently concluded fiscal year.
If less than all Brand Funds are spent in the fiscal year in which they accrue, the money will remain in the Brand Fund to be spent in the next year.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 20–27)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee Franchise Disclosure Document, any Brand Funds that are not spent during a fiscal year will remain in the Brand Fund and be used in the subsequent year. This means that the money franchisees contribute, which is 1% of gross sales per week, is carried over for future marketing and related expenses if not fully utilized within the year it was collected.
This policy can be beneficial for franchisees as it ensures that all contributions to the Brand Fund are ultimately used for marketing purposes. It also provides some assurance that funds will be available for larger marketing initiatives that may require accumulation of resources over time. However, franchisees should be aware that Chocolate Fish Coffee is a new franchisor and, in its most recently concluded fiscal year, did not spend any money from the Brand Fund.
It's important to note that the Brand Fund is not audited, although Chocolate Fish Coffee will provide unaudited annual financial statements to franchisees upon request. Franchisees may want to inquire about the specific plans for utilizing the Brand Fund in upcoming years to ensure that the funds are being used effectively to support the brand and drive sales.