Can Cilantro Taco Grill control the grand opening advertising fund for a new franchise?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
ranchise Agreement, Sections 13.2 and 13.6)
We require you to spend $15,000 in grand opening advertising and promotional activities prior to and within the first 30 days following the opening of your Franchised Business in your territory. Thereafter, you are required to spend at least 1% of monthly Gross Revenue on advertising for the Franchised Business in your territory. Local Advertising may include promotion and marketing through social media platforms, with our prior approval. Local Advertising expenditures also include contributions to a marketing fund operated by your landlord. We must approve all advertising materials. We reserve the right to collect some or all of your grand opening funds and/or your Local Advertising expenditure and implement grand opening campaign activit
Source: Item 10 — Initial Inventory. This estimate is for the cost of the initial inventory sufficient for approximately 3 months of operation. Your initial inventory will include ingredients and supplies, containers, cleaning products, and other disposables. (FDD pages 21–22)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, new franchisees are required to spend $15,000 on grand opening advertising and promotional activities before and within the first 30 days of opening their franchise. While the franchisee is responsible for these initial advertising expenditures, Cilantro Taco Grill retains some control over how these funds are spent.
Specifically, Cilantro Taco Grill reserves the right to collect some or all of the franchisee's grand opening funds. If they collect the funds, Cilantro Taco Grill can then implement grand opening campaign activities on behalf of the franchisee. This means that while the franchisee is obligated to spend the $15,000, Cilantro Taco Grill has the authority to manage those funds and dictate the advertising strategies employed during the grand opening period.
Furthermore, all advertising materials, even those developed by the franchisee, must be approved in writing by Cilantro Taco Grill. This approval process gives Cilantro Taco Grill significant control over the messaging and branding used in local advertising. The franchisor has 15 days to respond to a request for approval, and if they do not respond within that time, the advertising material is deemed disapproved. This level of oversight is common in franchising, as it allows the franchisor to maintain brand consistency and protect the overall image of the franchise system.