Under what conditions can Desi District require a franchisee to participate in advertising or promotional campaigns?

According to the 2024 FDD, a Maryland Rider to the Franchise Agreement addresses Desi District's ability to require franchisee participation in advertising or promotional campaigns. Specifically, Desi District cannot mandate that a franchisee take part in any advertising or promotional campaign, promotional materials, or display decorations or materials if the expense to the franchisee is indeterminate, determined by a third party, or determined by a formula. However, this restriction is lifted 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.

In simpler terms, Desi District needs to set a clear limit on how much a franchisee might have to spend on these campaigns, either as a percentage of their monthly sales or as a fixed dollar amount. This protects franchisees from potentially open-ended or unpredictable advertising costs.

This stipulation is particularly relevant for prospective franchisees in Maryland, as it is part of a rider specific to that state. Franchisees in other states may have different requirements or limitations regarding mandatory participation in advertising or promotional campaigns. Therefore, it is crucial for potential franchisees to carefully review the specific riders and agreements applicable to their state to understand their obligations and rights fully.