Can Devon Creek increase the minimum local advertising expenditure required of franchisees?
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
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, Devon Creek has the right to reasonably increase the minimum local advertising expenditure required of franchisees. Franchisees must spend at least $1,000 per month on local advertising until their gross revenue reaches $250,000. After that, they must spend a minimum of either $1,000 or 3% of gross revenue per month, with the possibility of reasonable increases by Devon Creek.
Devon Creek may also require franchisees to allocate up to half of their local advertising expenditures to an advertising cooperative, which would count towards fulfilling their local advertising obligations. Devon Creek also has the right to collect some or all of a franchisee's local advertising expenditure and implement local advertising on the franchisee's behalf.
It is important to note that certain costs and expenditures cannot be included in the franchisee's local advertising spend unless Devon Creek approves them in writing. These include incentive programs for employees, research expenditures, salaries and expenses for personnel attending advertising meetings, and charitable or political contributions.