What is the dependency for Cinch I.T. to administer and maintain the Marketing Fund?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
- e) Administer and maintain the Marketing Fund. (Franchise Agreement Section 21)
Marketing Program
We provide a national or regional marketing program. We charge you a 1.5% royalty, or a $200 monthly minimum, whichever is greater, to fund it. The Marketing Fund is administered by our members.
We and our designees will have the sole authority to direct all advertising, marketing, and promotional programs of the Marketing Fund and will have sole discretion over all aspects of those programs, including the concepts, materials, and media used and the placement and
allocation of them.
The Marketing Fund will be used, in our discretion, to pay for developing and conducting activities that we believe will enhance the goodwill associated with the Marks and the image of the CINCH I.T. System and to pay for the administration of the Marketing Fund and its programs. The purpose of the Marketing Fund is to pool marketing money from franchised businesses so as to achieve greater benefits for all in promoting the trade name and Marks.
For this reason, the Marketing Fund is not obligated to make expenditures for you or any other franchisee which are equivalent or proportionate to your or another franchisee's contribution, or to ensure that any particular franchisee benefits directly or pro rata from the marketing or promotion conducted by the Marketing Fund.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 28–39)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, Cinch I.T. is responsible for administering and maintaining the Marketing Fund, as stated in Franchise Agreement Section 21. The funds are collected via a 1.5% royalty or a minimum of $200 monthly payment from franchisees, whichever is greater. However, the Marketing Fund is administered by Cinch I.T.'s members.
Cinch I.T. has the sole authority to direct all advertising, marketing, and promotional programs of the Marketing Fund and has sole discretion over all aspects of those programs, including the concepts, materials, and media used and the placement and allocation of them. The Marketing Fund will be used, in Cinch I.T.'s discretion, to pay for developing and conducting activities that Cinch I.T. believes will enhance the goodwill associated with the Marks and the image of the CINCH I.T. System and to pay for the administration of the Marketing Fund and its programs.
For a prospective franchisee, this means that while they contribute to the Marketing Fund, Cinch I.T. ultimately decides how those funds are spent. The FDD specifies that the Marketing Fund is not obligated to make expenditures for any franchisee that are equivalent or proportionate to their contribution. This arrangement is typical in franchising, where marketing funds are pooled to benefit the system as a whole, but it also means that a franchisee's contribution may not directly benefit their specific location or market.