How will the Ella Cafe Brand Marketing Fee be administered?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.4 Brand Marketing Fee. Franchisor has established and administers a System-wide marketing, advertising and promotionsto facilitate regional and national advertising and marketing efforts to which Franchisee shall contribute a monthly fee.
On or before 5:00 PM EST on Tuesday each week (unless this day is a weekend or holiday, then on the business day before), Franchisee shall contribute to the Brand Marketing Fee an amount specified by Franchisor from time to time, but not to exceed 3% of Gross Sales for the applicable period ("Brand Marketing Fee").
The Brand Marketing Fee shall be due at the same time as the Royalty Fee.
Brand Marketing Fee shall be made at the time and in the manner provided for Royalty Fees in Section 4.
Franchisor shall notify Franchisee at least thirty (30) days before changing Brand Marketing Fee requirements.
The Brand Marketing Fee shall be maintained and administered by Franchisor or its designee as follows:
- 9.4.1.
Franchisor shall oversee all marketing programs, with sole control over creative concepts, materials and media used in such programs, and the placement and allocation thereof.
Franchisor does not warrant that any particular franchisee will benefit directly or pro rata from expenditures by the Brand Marketing Fee.
The program(s) may be local, regional or System-wide.
Franchisor does not warrant the success or effectiveness of any particular marketing program.
- 9.4.2.
Franchisee's Brand Marketing Fee may be used to meet the costs of, or to reimburse Franchisor for its costs of, any cost of conducting market research, producing, maintaining, administering and directing consumer advertising (including, without limitation, the cost of preparing and conducting television, radio, Internet, intranet, magazine, newspaper, and direct mail advertising campaigns and other public relations activities; developing and/or hosting an Internet and/or intranet web page or site and similar activities; employing advertising agencies to assist therein; and providing promotional brochures and other marketing materials to franchisees).
Brand Marketing Fee shall not be used for creating or placing any advertisement that is principally a solicitation for new franchisees, but may include in all advertising prepared using Brand Marketing Fee monies (including Internet advertising) information concerning franchise opportunities, and a portion of Brand Marketing Fee monies may be used to create and maintain one or more pages on Franchisor's web site devoted to advertising franchise opportunities and identifying and screening inquiries and applications submitted by franchise candidates.
- 9.4.3.
Franchisee acknowledges that the Brand Marketing Fee (and marketing program) is not a trust, escrow, or a fund, and neither Franchisor nor its affiliates assume no fiduciary obligation for administering or auditing the marketing program or for any other reason.
Franchisor may as it deems necessary prepare an unaudited report of the marketing program each year, and may provide Franchisee a copy upon receipt of Franchisee's written request.
9.5 Marketing Cooperatives.
Franchisor may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative for the geographic area encompassing the Location has been established at the time Franchisee commences operations hereunder, Franchisee shall immediately become a member of such Market Cooperative. If a Market Cooperative for the geographic area encompassing the Location is established during the term of this Agreement, Franchisee shall become a member of such Market Cooperative within 30 days. Franchisor shall not require Franchisee to be a member of more than one Market Cooperative. If Franchisor establishes a Market Cooperative:
- (a) Governance.
Each Market Cooperative will be organized and governed in a form and manner, and shall commence operations on a date, determined by Franchisor.
Franchisor may require the Market Cooperative to adopt bylaws or regulations prepared by Franchisor.
Unless otherwise specified by Franchisor, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members.
Franchisor will be entitled to attend and participate in any meeting of a Market Cooperative.
Any Ella Coffee House business owned by Franchisor in the Market Cooperative shall have the same voting rights as those owned by its franchisees.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the Brand Marketing Fee is administered by Ella Cafe or its designee to facilitate system-wide marketing, advertising, and promotions. Franchisees are required to contribute to this fund, with payments due weekly, specifically by 5:00 PM EST on Tuesdays (or the business day before if Tuesday falls on a weekend or holiday). The contribution amount is determined by Ella Cafe but will not exceed 3% of the franchisee's Gross Sales for the applicable period. This fee is due at the same time and in the same manner as the Royalty Fee. Ella Cafe will provide franchisees with at least 30 days' notice before changing the Brand Marketing Fee requirements.
Ella Cafe maintains sole control over the marketing programs, including creative concepts, materials, media, and the allocation of resources. The marketing programs may be local, regional, or system-wide, and Ella Cafe does not guarantee that any franchisee will directly or proportionally benefit from the expenditures. The Brand Marketing Fee may cover the costs of market research, consumer advertising (including television, radio, internet, and print campaigns), website development, and promotional materials for franchisees.
The Brand Marketing Fee is not a trust, escrow, or fund, and Ella Cafe does not assume any fiduciary obligation for administering or auditing the marketing program. Ella Cafe may prepare an unaudited report of the marketing program each year and provide a copy to franchisees upon written request. Furthermore, Ella Cafe may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative exists for the franchisee's location, the franchisee must become a member, with the cooperative's activities decided by a majority vote of its members. Ella Cafe is entitled to attend and participate in any Market Cooperative meeting and has the same voting rights as franchisees for any Ella Coffee House business it owns within the cooperative.