Can Christies International Real Estate increase the Advertising Fund Fee at any time?
Christies_International_Real_Estate Franchise · 2025 FDDAnswer from 2025 FDD Document
Advertising Fund. We do not currently have an Advertising Fund, and we have no current plans to establish one. However, in the future, we reserve the right to require you to pay a monthly Advertising Fund Fee for deposit into a system marketing fund (the "Advertising Fund"). We may increase the Advertising Fund Fee at any time; however, the Advertising Fund Fee will not exceed 3% of Gross Revenue. If collected, you will pay the Advertising Fund Fee in the same manner and at the same time as the Royalty Fee. If collected, we will place all Advertising Fund Fees we receive in the Advertising Fund and we will manage such Advertising Fund. Any Businesses operated by us or our affiliates will not be required to contribute to the Advertising Fund. The Advertising Fund will pay expenses in connection with the general promotion of the Marks and the System, which may include, but are not limited to, the development and operation of a call center; market research; customer retention; incentive programs; sales development programs; media planning; media buying fees; creating and producing advertising materials; outside advertising agency fees for creating advertising programs; public relation activities; outside public relations agency fees; technology investments; digital marketing; and reimbursing us the costs of administering the Advertising Fund. Additionally, we may use up to 10% of the Advertising Fund to solicit new franchise sales. The Advertising Fund is not a trust or escrow account, and we have no fiduciary obligations regarding the Advertising Fund. We cannot ensure that any individual Affiliate will benefit directly or on a pro rata basis from the future placement of any such advertising in its local market. We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Advertising Fund in that year. We will determine the methods of advertising, media employed, and scope, contents, terms and conditions of advertising, marketing, promotional and public relations campaigns and programs. Upon written request, we will provide you an annual unaudited statement of the receipts and disbursements of the Advertising Fund for the most recent calendar year. We do not intend to audit the Advertising Fund. Any end-of-year surpluses or shortages in the Advertising Fund in a given year will carry over to the next year.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 26–33)
What This Means (2025 FDD)
According to the 2025 Christies International Real Estate FDD, while there is currently no Advertising Fund, Christies International Real Estate reserves the right to implement one in the future. If established, franchisees would be required to pay a monthly Advertising Fund Fee.
Christies International Real Estate retains the right to increase this Advertising Fund Fee at any time. However, the FDD stipulates that the Advertising Fund Fee will not exceed 3% of the franchisee's Gross Revenue. This provides a limit to how much the fee can increase. The fee, if collected, would be paid in the same manner and at the same time as the Royalty Fee.
The Advertising Fund would be managed by Christies International Real Estate, and any businesses operated by them or their affiliates would not be required to contribute to it. The funds would be used for general promotion of the Marks and the System, including various marketing and administrative expenses. Up to 10% of the Advertising Fund may be used to solicit new franchise sales. It is important to note that the Advertising Fund is not a trust or escrow account, and Christies International Real Estate has no fiduciary obligations regarding the fund. Franchisees are not ensured to benefit directly or on a pro rata basis from advertising in their local market.
Christies International Real Estate will provide an annual unaudited statement of the Advertising Fund's receipts and disbursements upon written request. Any surpluses or shortages in the fund at the end of the year will be carried over to the next year. This structure is fairly typical in franchising, where franchisors manage advertising funds and have discretion over their use, though the lack of a fiduciary duty is a point to consider carefully.