What is the role of Crab N Spice in administering the Marketing Fund?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
commended) procedures for our system.
- F. Marketing Fund. We will administer the Marketing Fund. (Section 5.5).
- G. Website. We will maintain a website for the Crab N Spice brand, which will include your business information and telephone number. (Section 5.5)
Advertising
Our obligation. We will use the Marketing Fund only for marketing and related purposes and costs. Media coverage is primarily local. We use outside vendors and consultants to produce advertising. We are not required to spend any amount of advertising in the area or territory where any particular franchisee is located. We will maintain the brand website (which will be paid for by the Marketing Fund). We have no other obligation to conduct advertising.
Your own advertising material. You may use your own advertising or marketing material only with our approval. To obtain our approval, you must submit any proposed advertising or marketing material at least 14 days prior to use. If we do not respond, the material is deemed rejected. If you develop any advertising or marketing materials, we may use those materials for any purpose, without any payment to you.
Advertising council. We do not have an advertising council composed of franchisees. The franchise agreement does not give us the power to form an advertising council.
Local or Regional Advertising Cooperatives. We do not currently have any local or regional advertising cooperatives. We have the right to require you to participate in a local or regional advertising cooperative. We will define the area of the cooperative based on media markets, or other geographic criteria that we deem appropriate. Each franchisee in the area would have one vote per outlet (unless the franchisee is in default under its franchise agreement). The amount you must contribute to the cooperative will be determined by vote of the members, but not less than 1% of gross sales. If our own outlets are members of a cooperative, they must contribute to the cooperative on the same basis as franchisees, and they will vote on the same basis as other members. If our outlets have controlling voting power, there is no maximum on fees that could be imposed. We administer the cooperative, but we have the right to delegate responsibility for administration to an outside company such as an advertising agency or accounting firm, or to the franchisee members of the cooperative. We have the right to require the cooperative to operate from written bylaws or other governing documents that we determine. The documents are not currently available for you to review. Cooperatives will prepare annual financial statements which will be made available for review only by us and by the members of cooperative. We have the power to require cooperatives to be formed, changed, dissolved, or merged.
Advertising Fund. You and all other franchisees must contribute to our Marketing Fund. Your contribution is 1% of gross sales per week. We reserve the right to have other franchisees contribute a different amount or at a different rate.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 20–27)
What This Means (2024 FDD)
According to the 2024 Crab N Spice Franchise Disclosure Document, Crab N Spice is responsible for administering the Marketing Fund. Franchisees are required to contribute 1% of their gross sales per week to this fund, although Crab N Spice retains the right to have different franchisees contribute different amounts or rates. Company-owned outlets are not obligated to contribute to the Marketing Fund.
The Marketing Fund is used for marketing and related costs, with media coverage primarily focused at the local level. Crab N Spice utilizes outside vendors and consultants for advertising production and is not obligated to spend any specific amount on advertising in any particular franchisee's area or territory. The brand's website will be maintained using funds from the Marketing Fund.
The FDD states that the Marketing Fund is not audited, but Crab N Spice will provide unaudited annual financial statements to franchisees upon request. Funds that are not spent in the fiscal year in which they accrue will remain in the Marketing Fund for use in subsequent years. No money from the Marketing Fund is used to solicit new franchise sales. Crab N Spice also has the right to administer local or regional advertising cooperatives, or delegate that responsibility to an outside company or the franchisee members of the cooperative.