Can Dryer Vent Squad use the Brand Development Fund for administrative costs?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
u must contribute a monthly sum not to exceed 2% of monthly Gross Sales to the Brand Development Fund. We may use the Brand Development Fund for market studies, research, service development, product development, testing, research studies, technology development, advertising and public relations studies or services, creative production and printing of advertising and marketing materials, advertising copy and commercials, tracking costs, agency fees, administrative costs, which may include reimbursement for direct administrative and personnel costs associated with advertising and public relations, and any other costs associated with the development, marketing and testing of advertising, marketing and public relations materials, and the purchase of media placement, advertising time and public relations materials in national, regional or other advertising and public relations media in a manner determined by us, in our discretion, to be in the best interest of the franchisees and the System. Our company and/or affiliate owned Dryer Vent Squad Businesses may but are not required to contribute to the Brand Development Fund. The Brand Development Fund will be required to maintain unaudited financial records detailing its expenditures and will make available to you (no more frequently than one time in any 12-month period) an unaudited accounting of how the monies contributed to the Brand Development Fund were spent each year. We are not required to segregate the Brand Development Fund from our general operating funds and we are not a fiduciary or trustee of the Brand Development Fund. The Brand Development Fund will not be used to directly promote your Dryer Vent Squad Business or the marketing area in which your Dryer Vent Squad Business will be located. (Franchise Agreement, Article 9.A.).
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 30–36)
What This Means (2024 FDD)
According to the 2024 Dryer Vent Squad FDD, the Brand Development Fund can be used for administrative costs. Dryer Vent Squad franchisees contribute up to 2% of their monthly Gross Sales to this fund.
The FDD specifies that the Brand Development Fund may be used for a variety of expenses related to marketing, advertising, and public relations. These include market studies, research, service and product development, testing, advertising materials, tracking costs, and agency fees. Importantly, the fund can also cover administrative costs, including direct administrative and personnel costs associated with advertising and public relations.
Dryer Vent Squad may also use the Brand Development Fund to compensate themselves for administrative fees associated with managing the fund, as well as for internal employee salaries, expenses, and overhead related to managing the fund's activities. While the fund will not be used to directly market the sale of Dryer Vent Squad franchises, the advertising and marketing materials developed may contain information about franchise availability and contact information. This means that while franchisees contribute to the fund, Dryer Vent Squad retains significant control over how the money is spent, including using it for their own administrative purposes related to the fund's management.
Dryer Vent Squad is not required to segregate the Brand Development Fund from their general operating funds and they are not considered a fiduciary or trustee of the Brand Development Fund. While the Brand Development Fund will maintain unaudited financial records detailing its expenditures and will make available to franchisees an unaudited accounting of how the monies were spent each year (no more frequently than once in any 12-month period), the franchisees have limited control over the fund's usage.