Can Desi District require a franchisee to participate in advertising campaigns at an indeterminate expense?

According to the 2024 Desi District Franchise Disclosure Document, a Maryland Rider to the franchise agreement addresses advertising campaign expenses. Specifically, it states that Desi District cannot require a franchisee to participate in advertising or promotional campaigns where the expense to the franchisee is indeterminate, determined by a third party, or determined by a formula, unless the franchise agreement specifies the maximum percentage of gross monthly sales or the maximum absolute sum that the franchisee may be required to pay. This stipulation is part of Maryland law and is included in the rider to ensure compliance within that state.

This means that for Desi District franchises operating in Maryland, there are legal limitations on how advertising expenses can be mandated. The franchise agreement must clearly define either a maximum percentage of gross monthly sales or a maximum absolute dollar amount that a franchisee can be required to spend on advertising. This provides financial predictability and protects franchisees from potentially uncapped or unpredictable advertising costs.

For prospective Desi District franchisees in Maryland, this rider offers a degree of financial protection regarding advertising expenses. It is important to carefully review the franchise agreement and any associated riders to understand the specific terms related to advertising contributions. Franchisees should confirm that the agreement includes the necessary limitations on advertising expenses as required by Maryland law. This ensures that they are not subject to open-ended or arbitrarily determined advertising costs, which could negatively impact their profitability.