Can Chop5 Salad Kitchen franchisees vote on how the Brand Fund is administered?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
| TYPE OF FEE 1 | AMOUNT 2, 3 | DUE DATE | REMARKS |
|---|---|---|---|
| Brand Fund Fee | [1st Year] 0.5% of Gross Sales [2nd Year] 1.0% of Gross Sales [Rest of Term] 1.5% of Gross Sales | Same as royalty fee | You must contribute this amount to the Brand Fund we administer. You have no voting rights pertaining to the administration of the Brand Fund, the creation or placement of advertising, or the amount of the brand fund fee. We may increase the brand fund fee by up to 4% on 180 days' prior notice. The maximum total amount we may charge at any given time for the brand fund fee, Local Advertising Commitment and Cooperative Advertising Fee is capped at 8.5%. |
Source: Item 6 — OTHER FEES (FDD pages 12–17)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, franchisees do not have voting rights regarding the Brand Fund. The FDD states that franchisees must contribute to the Brand Fund, which Chop5 Salad Kitchen administers to promote brand recognition and improve the system.
The Brand Fund fee varies depending on the year. In the first year, it is 0.5% of Gross Sales, in the second year, it is 1.0% of Gross Sales, and for the remainder of the term, it is 1.5% of Gross Sales. This fee is due at the same time as the royalty fee. Chop5 Salad Kitchen retains the right to increase the Brand Fund fee by up to 4% with 180 days' prior notice.
While franchisees do not have a direct say in how the Brand Fund is managed, they are required to contribute to it. Additionally, franchisees are responsible for a Local Advertising Commitment, which is 8.0% of Gross Sales in the first year and 3.0% of Gross Sales for the rest of the term. The maximum total amount Chop5 Salad Kitchen may charge for the brand fund fee, Local Advertising Commitment and Cooperative Advertising Fee is capped at 8.5% of Gross Sales. Franchisees may have the opportunity to influence advertising at the cooperative level, if one is established, as each member gets one vote per restaurant in the cooperative.