How are payments to the Devon Creek Brand Development Fund made?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
ivities; (v) charitable, political or other contributions or donations.
13.3 Brand Development Fund.
- 13.3.1 Franchisor may establish a national fund on behalf of the System for national advertising, marketing, and brand development (the "Brand Fund"). Franchisee is required to contribute One and a half percent (1.5%) of monthly Gross Revenue, to the Brand Development Fund ("Brand Development Fund Contribution"). Franchisor reserves the right to increase the Brand Development Fund Contribution to an amount not to exceed three percent (3%) of monthly Gross Revenue. Payments will be made in the same manner and time as the Royalty Fees.
- 13.3.2. Franchisor shall direct the Brand Fund and shall have sole discretion to approve or disapprove the creative concepts, materials and media used in such programs and the placement and allocation thereof. Franchisee agrees and acknowledges that the Brand Development Fund is intended to maximize general public recognition and acceptance of the Marks and enhance the collective success of all Franchised Businesses operating under the System.
- 13.3.3.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, franchisees are required to contribute to the Brand Development Fund, with payments made in the same manner and time as the royalty fees. The initial contribution is 1.5% of monthly Gross Revenue, but Devon Creek retains the right to increase this contribution up to a maximum of 3% of monthly Gross Revenue. This fund is used for national advertising, marketing, and brand development efforts.
This means that as a Devon Creek franchisee, you will need to budget for this ongoing marketing expense, which is tied directly to your revenue. The fact that payments are aligned with royalty fee payments simplifies the process, but it's crucial to understand that Devon Creek can increase the contribution percentage, impacting your profitability. While the FDD does not specify the exact method of payment, it does state that it will be the same as the royalty fees.
It is important to note that if a franchisee is late in paying the Brand Development Fund contribution, Devon Creek may charge a late fee of $50 per day. Additionally, any of the franchisee's checks that are returned, or an electronic funds transfer from the franchisee's bank account is denied, for insufficient funds, the franchisee will pay Devon Creek a non-sufficient funds fee of $250 per occurrence.
Prospective franchisees should clarify with Devon Creek the exact payment methods accepted for both royalty fees and Brand Development Fund contributions (e.g., electronic transfer, check) and ensure they understand the reporting schedule for Gross Revenue to avoid late fees. Understanding the potential for contribution increases and the specific uses of the Brand Development Fund is also essential for financial planning.