What is the purpose of the 'Marketing Fund' for Crab N Spice franchisees?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Marketing Fund" means the fund established (or which may be established) by CNS Franchising into which Marketing Fund Contributions are deposited.
CNS Franchising shall manage the Marketing Fund.
The Marketing Fund will be spent at CNS Franchising's sole discretion, and CNS Franchising has no fiduciary duty with regard to the Marketing Fund.
CNS Franchising may accumulate funds in the Marketing Fund and carry the balance over to subsequent years.
If the Marketing Fund operates at a deficit or requires additional funds at any time, CNS Franchising may loan such funds to the National Marketing Fund on reasonable terms.
CNS Franchising will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of CNS Franchising's fiscal year and will provide the financial statement to Franchisee upon request.
Each Market Cooperative shall be devoted exclusively to administering regional advertising and marketing programs and developing (subject to CNS Franchising's approval) standardized promotional materials for use by the members in local advertising and promotion.
Unless otherwise specified by CNS Franchising, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members.
The majority vote of the Market Cooperative will determine the dues to be paid by members of the Market Cooperative, including Franchisee, but not less than 1% of Gross Sales.
Franchisee shall spend at least 2% of Gross Sales each month on marketing the Business.
Upon request of CNS Franchising, Franchisee shall furnish proof of its compliance with this Section.
Source: Item 22 — CONTRACTS (FDD pages 50–51)
What This Means (2024 FDD)
According to Crab N Spice's 2024 Franchise Disclosure Document, the Marketing Fund is established by CNS Franchising, where Marketing Fund Contributions are deposited. CNS Franchising manages the Marketing Fund and has sole discretion on how the fund is spent, also having no fiduciary duty regarding the fund. CNS Franchising may accumulate funds in the Marketing Fund and carry the balance over to subsequent years, and if the Marketing Fund operates at a deficit, CNS Franchising may loan funds to it on reasonable terms. CNS Franchising will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of CNS Franchising's fiscal year and provide it to the franchisee upon request.
In addition to the Marketing Fund, Crab N Spice franchisees may also be required to participate in a local Market Cooperative, which focuses on regional advertising and marketing programs. Each Market Cooperative shall be devoted exclusively to administering regional advertising and marketing programs and developing (subject to CNS Franchising's approval) standardized promotional materials for use by the members in local advertising and promotion. The activities carried on by each Market Cooperative shall be decided by a majority vote of its members, unless otherwise specified by CNS Franchising. The majority vote of the Market Cooperative will determine the dues to be paid by members of the Market Cooperative, including Franchisee, but not less than 1% of Gross Sales.
Franchisees are also required to spend at least 2% of Gross Sales each month on marketing the Business. Upon request of CNS Franchising, Franchisee shall furnish proof of its compliance with this Section.