What is Chocolate Fish Coffee's obligation regarding the use of the Brand Fund?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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Advertising
Our obligation. We will use the Brand Fund only for marketing and related purposes and costs. Media coverage is primarily local. We use outside vendors and consultants to produce advertising. We are not required to spend any amount of advertising in the area or territory where any particular franchisee is located. We will maintain the brand website (which may be paid for by the Brand Fund). We have no other obligation to conduct advertising.
Your own advertising material. You may use your own advertising or marketing material only with our approval. To obtain our approval, you must submit any proposed advertising or marketing material at least 14 days prior to use. If we do not respond, the material is deemed rejected. If you develop any advertising or marketing materials, we may use those materials for any purpose, without any payment to you.
Advertising council. We do not have an advertising council composed of franchisees. The franchise agreement does not give us the power to form an advertising council.
Local or Regional Advertising Cooperatives. We do not currently have any local or regional advertising cooperatives.
Advertising Fund. You and all other franchisees must contribute to our Brand Fund. Your contribution is 1% of gross sales per week.
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, Chocolate Fish Coffee will use the Brand Fund only for marketing and related costs. These marketing efforts are primarily focused locally, and Chocolate Fish Coffee uses outside vendors and consultants to produce advertising materials. Chocolate Fish Coffee is not required to spend any specific amount on advertising in the area or territory where any particular franchisee is located. Chocolate Fish Coffee will maintain the brand website, potentially using the Brand Fund to cover the costs. Beyond these stipulations, Chocolate Fish Coffee has no other obligation to conduct advertising.
Franchisees are required to contribute 1% of their gross sales per week to the Brand Fund. However, Chocolate Fish Coffee reserves the right to have other franchisees contribute a different amount or at a different rate, and outlets that Chocolate Fish Coffee owns are not obligated to contribute to the Brand Fund. The Brand Fund is not audited, but Chocolate Fish Coffee will make unaudited annual financial statements available to franchisees upon request.
Because Chocolate Fish Coffee is a new franchisor, they did not spend any money from the Brand Fund in their most recently concluded fiscal year. If the Brand Fund has money left over at the end of the fiscal year, the money will remain in the Brand Fund to be spent in the next year. No money from the Brand Fund is spent principally to solicit new franchise sales.
Prospective franchisees should note that Chocolate Fish Coffee retains significant discretion over the Brand Fund's use, with no obligation to spend in any specific area. The lack of an advertising council composed of franchisees means franchisees have limited input on how the fund is spent. The fact that Chocolate Fish Coffee's own outlets are not required to contribute may also be a point of consideration for franchisees.