Can Desi District require a franchisee to participate in promotional campaigns where the expense is determined by a third party?

According to the 2024 Desi District Franchise Disclosure Document, a Maryland rider addresses promotional campaign expenses. Specifically, Desi District cannot require a franchisee to participate in promotional campaigns or use promotional materials if the expense is indeterminate, determined by a third party, or determined by a formula. However, this restriction does not apply if 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 means that in Maryland, Desi District must set a clear limit on how much a franchisee can be required to spend on promotional activities if the expense is not a fixed amount. This protects franchisees from potentially open-ended or unpredictable promotional costs determined by outside parties or complex calculations.

For a prospective Desi District franchisee in Maryland, this provides some assurance that promotional expenses will be capped, either as a percentage of sales or as a fixed sum. Franchisees should carefully review the franchise agreement to understand how these promotional expenses are defined and what the maximum allowable costs are. This ensures they can accurately budget for marketing and promotional activities without the risk of unexpected or excessive charges.