Is Cost Cutters Family Hair Salon required to contribute to the advertising fund?

According to the 2024 Cost Cutters Family Hair Salon Franchise Disclosure Document, Cost Cutters Family Hair Salon is not required to contribute to the advertising fund. However, if Cost Cutters Family Hair Salon owns and operates any of its own Cost Cutters businesses, those businesses are required to contribute to the advertising fund.

Franchisees, on the other hand, are required to pay weekly advertising fees equal to 4% of their weekly gross revenues. These fees are deposited into an advertising fund that is administered and controlled exclusively by Cost Cutters Family Hair Salon. The failure to pay these advertising fees constitutes a material breach of the franchise agreement.

Cost Cutters Family Hair Salon has absolute discretion over the use of the advertising fund, including selecting advertising agencies, determining the type, content, and frequency of advertising. The advertising fund is not a trust or escrow account, and Cost Cutters Family Hair Salon has no fiduciary duty to the franchisee regarding the collection or expenditure of these advertising fees. The advertising fees paid by franchisees are not refundable under any circumstances.