Is Chocolate Fish Coffee required to spend a specific amount on advertising in a franchisee's area?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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. 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 Chocolate Fish Coffee's 2024 Franchise Disclosure Document, Chocolate Fish Coffee is not required to spend a specific amount on advertising in any particular franchisee's area or territory. However, Chocolate Fish Coffee will use the Brand Fund, which is funded by franchisee contributions, for marketing and related costs. Media coverage is primarily local. Franchisees are required to contribute 1% of gross sales per week to the Brand Fund. Chocolate Fish Coffee retains 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.
As a new Chocolate Fish Coffee franchisee, you are required to develop a market introduction plan and obtain Chocolate Fish Coffee's approval of the plan at least 30 days before your business's projected opening date. You may use your own advertising or marketing material only with Chocolate Fish Coffee's approval, which requires submitting the material at least 14 days prior to use. If Chocolate Fish Coffee does not respond, the material is deemed rejected. If you develop any advertising or marketing materials, Chocolate Fish Coffee may use those materials for any purpose, without any payment to you.
It is important to note that Chocolate Fish Coffee does not have an advertising council composed of franchisees, and the franchise agreement does not give them the power to form one. Additionally, Chocolate Fish Coffee does not currently have any local or regional advertising cooperatives. This means that franchisees do not have a formal mechanism for influencing advertising strategy or pooling resources for regional campaigns.