Can Deck Medic use the National Advertising Fund to compensate itself for administrative fees?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
developments and improvements. (Franchise Agreement, Article 9.A.).
We may use the National Advertising Fund to compensate ourselves for administrative fees associated with managing the National Advertising Fund and for our internal employee salaries, expenses and overhead associated with or reasonably allocated to managing the activities of the National Advertising Fund and performing services on behalf of the National Advertising Fund including, but not limited to, directing, developing and managing media of the National Advertising Fund. We will not use the National Advertising Fund to directly market the sale of Deck Medic Business franchises; however, the advertising, marketing and brand development materials developed, including the System website, may contain information as to the availability of Deck Medic Business franchises for sale and contact information for franchise inquiries. As of December 31, 2023, we have collected $20,592.19 towards the National Advertising Fund. Of the $20,592.19 collected, we spent 17,587.93 (85)% towards the website and social media placement and rolled the re
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–29)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, Deck Medic can use the National Advertising Fund to cover administrative fees. Specifically, Deck Medic may use the fund to compensate itself for administrative fees associated with managing the National Advertising Fund. This includes internal employee salaries, expenses, and overhead reasonably allocated to managing the fund's activities and performing services on its behalf, such as directing, developing, and managing media. Deck Medic is not required to segregate the National Advertising Fund from its general operating funds and is not a fiduciary or trustee of the National Advertising Fund.
This means that a portion of the franchisees' contributions to the National Advertising Fund, which can be up to 2% of monthly Gross Sales, may be used to cover Deck Medic's administrative and personnel costs related to advertising and public relations. While this is a common practice in franchising, prospective franchisees should be aware that these funds are not exclusively used for direct advertising and marketing efforts.
As of December 31, 2023, Deck Medic had collected $20,592.19 towards the National Advertising Fund. Of this amount, $17,587.93 (85%) was spent on the website and social media placement, and the remaining $3,004.26 (15%) was rolled into the National Advertising Fund for 2024. Deck Medic is required to maintain unaudited financial records detailing the fund's expenditures and will make available to franchisees (no more than once in any 12-month period) an unaudited accounting of how the monies contributed to the National Advertising Fund were spent each year.