Can Devon Creek collect a franchisee's local advertising expenditure and implement local advertising on the franchisee's behalf?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
, as modified from time to time, shall be final and binding upon Franchisee.
13.2 Local Advertising.
- 13.2.1 Franchisee shall spend not less than the greater of One Thousand Dollars ($1,000) per month until such time as Franchisee has obtained $250,000 in gross revenue, thereafter a minimum equal to the greater of One Thousand Dollars ($1,000) or Three Percent (3%) of Gross Revenue per month, subject to reasonable increases by Franchisor, on advertising for the Franchised Business in the Territory ("Local Advertising"). Franchisor may require Franchisee to allocate to an advertising cooperative, as described in Section 13.4, up to one-half of Franchisee's required Local Advertising expenditures. Such allocation will be in partial satisfaction of Franchisee's obligations pursuant to this Section 13.2.1. Franchisor reserves the right to collect some or all of Franchisee's Local Advertising expenditure and implement Local Advertising on Franchisee's behalf.
- 13.2.2 Within thirty (30) business days of Franchisor's request, Franchisee shall provide a quarterly expenditure report accurately reflecting Franchisee's Local Advertising expenditures for the preceding quarterly period. The following costs and expenditures incurred by Franchisee shall not be included in Franchisee's expenditures on Local Advertising for purposes of this Section, unless approved in advance by Franchisor in writing: (i) incentive programs for employees or agents of Franchisee; (ii) research expenditures; (iv) salaries and expenses of any of Franchisee's personnel to attend advertising meeting
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, Devon Creek retains the right to collect a franchisee's local advertising expenditure and use it to implement local advertising on the franchisee's behalf.
This means that Devon Creek has the authority to manage a franchisee's local advertising funds directly. The franchisee may be required to allocate up to one-half of their required local advertising expenditures to an advertising cooperative managed by Devon Creek. This allocation would then count towards the franchisee's overall local advertising obligations.
This arrangement gives Devon Creek control over how local advertising funds are spent, potentially ensuring brand consistency and coordinated campaigns. However, it also means the franchisee has less direct control over their local advertising strategies. Franchisees are still required to provide quarterly expenditure reports detailing their local advertising spending within 30 days of Devon Creek's request.