For what purposes can Chocolate Fish Franchising use the Brand Fund?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- (b) Use.
Chocolate Fish Franchising shall use the Brand 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 Chocolate Fish 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 Brand Fund (including the compensation of Chocolate Fish Franchising's employees working on marketing and for accounting, bookkeeping, reporting, legal and other expenses related to the Brand Fund).
- (c) Discretion.
Franchisee agrees that expenditures from the Brand Fund need not be proportionate to contributions made by Franchisee or provide any direct or indirect benefit to Franchisee.
The Brand Fund will be spent at Chocolate Fish Franchising's sole discretion, and Chocolate Fish Franchising has no fiduciary duty with regard to the Brand Fund.
- (d) Contribution by Other Outlets.
Chocolate Fish Franchising is not obligated to (i) have all other Chocolate Fish Coffee businesses (whether owned by other franchisees or by Chocolate Fish Franchising or its affiliates) contribute to the Brand Fund, or (ii) have other Chocolate Fish Coffee businesses that do contribute to the Brand Fund contribute the same amount or at the same rate as Franchisee.
- (e) Surplus or Deficit.
Chocolate Fish Franchising may accumulate funds in the Brand Fund and carry the balance over to subsequent years.
If the Brand Fund operates at a deficit or requires additional funds at any time, Chocolate Fish Franchising may loan such funds to the Brand Fund on reasonable terms.
- (f) Financial Statement. Chocolate Fish Franchising will prepare an unaudited annual financial statement of the Brand Fund within 120 days of the close of Chocolate Fish Franchising's fiscal year and will provide the financial statement to Franchisee upon request.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the Brand Fund is used for marketing, advertising, and public relations. Chocolate Fish Franchising details that the Brand Fund can cover materials, programs, and campaigns at the local, regional, national, and international levels, along with related overhead expenses. These funds must be kept in a separate bank account from Chocolate Fish Franchising's other accounts.
Specifically, Chocolate Fish Franchising has the discretion to use the Brand Fund for activities such as developing and placing advertisements and promotions, sponsorships, contests, sweepstakes, and developing decor, trade dress, Marks, and branding. The Brand Fund can also be used for maintaining brand websites, social media, internet activities, e-commerce programs, search engine optimization, market research, public relations, media or agency costs, trade shows, printing and mailing, and administrative/overhead expenses related to the Brand Fund. This includes compensating Chocolate Fish Coffee employees working on marketing and covering accounting, bookkeeping, reporting, and legal expenses related to the Brand Fund.
Prospective franchisees should note that Chocolate Fish Franchising has sole discretion over how the Brand Fund is spent, and these expenditures do not need to be proportionate to a franchisee's contributions or provide any direct benefit to the franchisee. Chocolate Fish Franchising is also not obligated to have all Chocolate Fish Coffee businesses contribute to the Brand Fund or contribute the same amount. The Brand Fund can accumulate funds, and Chocolate Fish Franchising may loan funds to the Brand Fund if it operates at a deficit. Franchisees are entitled to an unaudited annual financial statement of the Brand Fund within 120 days of the close of Chocolate Fish Franchising's fiscal year, upon request.