How is the National Advertising Fund Fee calculated for a Deck Medic franchise?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
han 6% of your Gross Sales.
Note 3: Gross Sales – "Gross Sales" means the total dollar sales from all business and customers of your Deck Medic Business and includes the total gross amount of revenues and sales from whatever source derived, whether in form of cash, credit, agreements to pay or other consideration including the actual retail value of any goods or services traded, borrowed, or received by you in exchange for any form of non-money consideration (whether or not payment is received at the time of the sale), from or derived by you or any other person or Corporate Entity from business conducted or which started in, on, from or through your Deck Medic Business and/or your Operating Territory, whether such business is conducted in compliance with or in violation of the terms of the Franchise Agreement. Gross Sales include the total gross amount of revenues and sales from whatever source derived from and/or derived by you including, any person and/or Corporate Entity acting on your behalf, from business conducted within and/or outside your operating territory that is related to your Deck Medic Business and/or a competitive business located and/or operated within your Operating Territory, outside your operating territory, and/or otherwise. Gross Sales do not include (a) sales taxes that you collect and remit to the proper taxing authority, and (b) authorized promotional discounts that you provide to customers.
Note 4: National Advertising Fund – The national advertising fund fee is a continuing monthly fee equal to an amount of up to 2% of your monthly Gross Sales (the "National Advertising Fund Fee"). Currently the National Advertising Fund Fee is equal to an amount of 1% of your monthly Gross Sales.
Note 5: Franchisee Directed Local Marketing – In the first year of operation, we will help you develop a plan for advertising, promotions, and public relations throughout your operating territory and you shall make expenditures in accordance with such plan.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, the National Advertising Fund Fee is calculated as a percentage of the franchisee's monthly Gross Sales. Specifically, the FDD states that the fee can be up to 2% of monthly Gross Sales. Currently, however, Deck Medic charges 1% of monthly Gross Sales for the National Advertising Fund Fee. This fee is a continuing monthly obligation for franchisees. Gross Sales are defined as the total dollar sales from all business and customers of your Deck Medic Business. Gross Sales include revenues from any source derived from business conducted in or through your Deck Medic Business and/or Operating Territory, including business conducted in violation of the Franchise Agreement. Gross Sales do not include sales taxes that you collect and remit to the proper taxing authority, and authorized promotional discounts that you provide to customers. The National Advertising Fund fee is due monthly on the second Wednesday of each month and will be debited automatically from your bank account by ACH or other means designated by Deck Medic.
This means that a Deck Medic franchisee needs to budget for this ongoing advertising expense, which is directly tied to their sales volume. If a franchisee's sales increase, the amount contributed to the National Advertising Fund will also increase. While the fee is currently set at 1%, Deck Medic retains the right to increase it up to 2% of Gross Sales, which could impact a franchisee's profitability. It is important to note that this fee is separate from the local marketing expenditures that franchisees are required to make, which are 5% of the previous year's Gross Sales after the first year of operation.
Franchisees should be aware that Deck Medic has the right to modify the National Advertising Fund Fee within the stated limits. It is common for franchise systems to have a national advertising fund to promote the brand and support marketing initiatives on a larger scale. Prospective franchisees should inquire about how the funds are used and what benefits they can expect to receive from the national advertising efforts. Understanding the allocation of these funds can help franchisees assess the value they receive in return for their contribution.