Can ADQ change how the sales promotion program fees are allocated and spent for Dq Treat?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
nd the sales promotion program fees are not held by ADQ in trust.
Fees
ADQ's sales promotion activities are funded by the sales promotion program fees you and other DQ® franchisees must pay. Depending on your sales promotion program fee rate, all or a portion of the sales promotion program fees you pay may go to the national marketing fund ("NMF"), and a portion may go to regional or designated [TV] market area ("DMA") level sales promotion activities, "pooled" accounts for the benefit of a certain type of DQ® restaurant or store, or toward activities at an individual store level. ADQ has the right to establish and periodically change how the sales promotion program fees are allocated and spent without notice to you.
You must pay a sales promotion program fee up to 6% of Gross Sales on Orange Julius® branded products and 5% - 6% of Gross Sales on all other products, except as otherwise stated below. At the time of this disclosure document, the sales promotion program fee for Orange Julius® branded products is at 5% for Street locations and 1.25% for Captive-venue locations. ADQ has the right to increase the sales promotion program fee to an amount within the applicable range upon 90 days' notice. If you relocate a store under ADQ's relocation policy, you will be permitted to phase in to the fee structure of the new franchise agreement you sign, using the formula described in Item 6. If you are a conversion franchisee, you must pay a sales promotion program fee as set forth in the applicable conversion addendum in Exhibit C.
Company-operated restaurants will pay a sales promotion program fee on the same basis as similar franchisees for the DMA in which those restaurants are located, as described in Item 6. Other franchisees pay greater, lesser or no sales promotion program fees.
ADQ receives a portion of the sales promotion program fee payments made by franchisees to compensate ADQ for the sales promotion, marketing and administrative services that ADQ provides (the "management fee"). Currently, the management fee is computed as 7% of sales promotion program fee payments received. ADQ does not take a management fee on sales promotion program fees above 3% of gross sales. For those franchisees that pay sales promotion program fees to territory operators, the territory operators remit all or some of those fees to ADQ and territory operators may retain a portion of the management fee, depending on the arrangement
the territory operator has with the franchisee. In addition, ADQ takes 7% of all outside vendor payments received from agreements negotiated by ADQ.
Source: Item 11 — UItem 11U***:** U**Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 37–47)
What This Means (2025 FDD)
According to Dq Treat's 2025 Franchise Disclosure Document, ADQ has the authority to modify the allocation and spending of sales promotion program fees without prior notice to franchisees. These fees, which franchisees are required to pay, fund Dq Treat's sales promotion activities. The fees may be directed towards the national marketing fund (NMF), regional or designated market area (DMA) activities, "pooled" accounts for specific types of DQ restaurants, or even individual store-level initiatives. This gives ADQ considerable flexibility in determining how marketing funds are distributed across various channels and locations.
This flexibility extends to various aspects of marketing and promotion. ADQ can allocate funds by type of Dq Treat store, by local market, DMA market, or region, or for concept-specific marketing programs. They can also create specialized marketing pools or programs in the future. Furthermore, ADQ can set aside a portion of the fees for individual stores to use locally, through a reimbursement program or online credit system. The allocation of these fees can change between national, regional, local, or individual store efforts, and these changes can occur without notice.
For a prospective Dq Treat franchisee, this means that the level of control over marketing spend is limited. While franchisees contribute to the sales promotion program fees, ADQ ultimately decides how those funds are used. While the accounting for the funds used for DQ® national and DMA activities and materials are reviewed by an independent national accounting firm on an annual basis, ADQ does not have any fiduciary obligations to franchisees with respect to the funds, nor any obligation to spend any amount on sales promotion in the area or territory where you are located. Franchisees should be aware that marketing strategies and resource allocation can shift based on ADQ's decisions, potentially impacting their local market.
Dq Treat franchisees are required to use only the sales promotion or other advertising materials that ADQ furnishes or makes available to them, or other materials that ADQ approves for use in their sales promotion activities. Examples of sales promotion and other advertising materials that ADQ must approve prior to your use include menu board transparencies, counter mats, counter mat inserts, posters, billboard paper or vinyl, newspaper inserts, lawn signs, banners, menu board or register toppers, window clings, cake freezer merchandising, stanchions/display point-of-purchase, TV and radio creative, online communication, electronic or mobile media, loyalty programs, and direct mail. Franchisees may propose their own advertising materials, but ADQ's approval is required, ensuring brand consistency and adherence to company standards.
The sales promotion program fees for Orange Julius® branded products is at 5% for Street locations and 1.25% for Captive-venue locations. ADQ has the right to increase the sales promotion program fee to an amount within the applicable range upon 90 days' notice. This system allows ADQ to adapt its marketing strategies and resource allocation as needed, but it also means that franchisees have limited direct influence over how their contributions are spent and must adhere to ADQ's approved marketing materials and strategies.