Is a Dq Treat franchisee required to pay a sales promotion program fee, and if so, to whom?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.3 Sales Promotion Program Fee.
- (A) Licensee must pay to Company monthly a sales promotion program fee of:
- (1) For Orange Julius® branded products, up to 6% of Gross Sales. The current fee is 5% for Street Locations, and 1.25% for Captive-venue Locations;
- (2) For all other products, 5% 6% of Gross Sales.
- (B) Company will determine the exact percentage to be paid by Licensee within the ranges in section 9.3(A) without regard to the amount that any other licensee of Company may pay. Company will let Licensee know at least 90 days in advance of imposing any requirement that Licensee pay a higher percentage within the applicable range.
- (C) Licensee must also pay all sales promotion fees required by any lease or sublease for the Restaurant premises, and must comply with all sales promotion requirements of Licensee's lease or sublease. If Licensee is Company's or an affiliate's sublessee, then Licensee must to pay the required lease sales promotion fees to Company in addition to the fee payable under section 9.3(A), even if the landlord delays or fails to enforce prompt compliance with all lease requirements.
- (A) Licensee must pay to Company monthly a sales promotion program fee of:
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to the 2025 Dq Treat FDD, franchisees are generally required to pay a sales promotion program fee to the company. The standard agreement stipulates a monthly fee. For Orange Julius branded products, the fee is up to 6% of gross sales, with the current fee being 5% for street locations and 1.25% for captive-venue locations. For all other products, the fee is 5% to 6% of gross sales. The exact percentage is determined by Dq Treat, and franchisees will receive at least 90 days' notice before any increase within the applicable range. Franchisees must also pay any sales promotion fees required by their lease or sublease, even if the landlord delays enforcement. All amounts, except the initial franchise fee, are computed monthly and paid to Dq Treat within 10 days after the end of the month.
However, the FDD also includes addenda that can modify these terms. One addendum states that the standard sales promotion program fee section is deleted and replaced, requiring the franchisee to pay a monthly sales promotion program fee equal to 3% of gross sales to Dq Treat. Another addendum replaces the standard fee with a rate that is the greater of 2.5% or the rate from the existing franchise agreement.
Dq Treat retains sole discretion over how the sales promotion program fees are spent, including the selection of promotional materials and activities. While Dq Treat aims to act in the best interests of the brand or franchise system, it has no fiduciary obligation to franchisees regarding these activities or expenditures, and the fees are not held in trust. Dq Treat will provide sales promotion activities receipts and expenditures upon request but is not required to audit them. Dq Treat may use a portion of the fees to cover the costs of administering and promoting sales promotion activities. Franchisees are generally required to use only approved sales promotion materials, whether provided by Dq Treat or developed by the franchisee and approved by Dq Treat.