What control does Ella Cafe Franchisor have over marketing programs?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
the Coffee House as Franchisor may designate. Franchisee must purchase and distribute all coupons, clothing, toys, and other collateral merchandise (and only the coupons, clothing, toys, and collateral merchandise) designated by Franchisor for use in connection with each such program, promotion, or offering. This may include, among other things, displaying signage or other literature containing information about the franchise offering.
- 9.9. Participation in E-Commerce. Franchisee must at all times cooperate with Franchisor and actively participate in any and all social media and other e-commerce advertising programs, management programs, and other platforms Franchisor requires and pay Franchisor or a third-party provider the costs associated with such programs or platforms. The costs and/or fees associated with these programs are in addition to other advertising fees under this Agreement.
- 9.10. Business Directory Listings. Franchisee must place and pay the cost of business listings in such print and online directories and categories, whether electronic or hard copy, as Franchisor may require from time to time. Amounts paid for business directory listings will not be credited toward any of the expenditures required by this Section 9.
- 9.11. Social Media and E-commerce. Franchisor may create and license to the Franchisee, social media accounts, e-mail marketing software accounts and other electronic accounts that use the Marks or any portion of them, used by the Franchisee with any Internet directory, website, platform, or similar item in the operation of the Franchised Business. The Franchisee may not create websites, social media accounts, e-mail marketing software accounts or other comparable accounts outside of those which Franchisor license to the Franchisee.
- 9.12. Franchisee shall operate the Franchised Business so that it is clearly identified and advertised as a "ELLA COFFEE HOUSE" business. Franchisee shall use the trademark "ELLA", "ELLA COFFEE HOUSE" and the other Marks which now or hereafter may form a part of the System, on all signs, paper supplies, business cards, uniforms, advertising materials, technology platforms, signs and other articles in the identical combination and manner as the Franchisor may prescribe in writing and the Franchisee shall supply to the Franchisor samples or photographs of the same upon Franchisor's request. Franchisee shall comply with all trademark, trade name, service mark and copyright notice marking requirements and Franchisee shall supply to the Franchisor samples or photographs of the same upon our request.
ARTICLE 10. RECORDS AND REPORTS
10.1 Systems. Franchisee shall use such customer data management, sales data management, administrative, bookkeeping, accounting, and inventory control procedures and systems as Franchisor may specify in the Manual or otherwise in writing. Franchisee must acquire and use only the point of sale cash registers and computer systems and equipment that Franchisor prescribes for use by System Coffee Houses ("POS System") and adhere to Franchisor's
requirements for use. Requirements may include, among other things, connection to remote servers, off-site electronic repositories, and high speed Internet connections. Franchisor may, in its sole discretion, require Franchisee to add to add to the POS System memory, ports, and other accessories or peripheral equipment or additional, new, or substitute software; replace or upgrade the POS System (software and hardware) and other computers as Franchisor prescribes; and enter into maintenance agreements for the POS System and other computers.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the franchisor exerts significant control over marketing programs at both the local and market cooperative levels. Ella Cafe requires franchisees to participate in social media and e-commerce advertising programs and pay the associated costs. Franchisees must also place and pay for business directory listings as required by Ella Cafe. Furthermore, Ella Cafe may create and license social media accounts and email marketing software accounts for franchisees' use, prohibiting franchisees from creating their own outside of those licensed by the franchisor. Franchisees are obligated to operate their businesses so that they are clearly identified and advertised as an "ELLA COFFEE HOUSE" business, using the trademarks and other marks in the manner prescribed by Ella Cafe.
Ella Cafe also controls marketing through Market Cooperatives, which are regional advertising and marketing programs. The franchisor has the right to attend and participate in any Market Cooperative meeting and any Ella Coffee House business owned by Ella Cafe has the same voting rights as franchisees. If the members of a Market Cooperative cannot agree on how to spend the cooperative's money, Ella Cafe may assume decision-making authority after providing 10 days' notice. No advertising or promotional plans or materials may be used by a Market Cooperative without the prior approval of Ella Cafe, and Ella Cafe may designate the national or regional advertising agencies used by the Market Cooperative.
In addition to the above, Ella Cafe franchisees must spend at least 2% of gross sales each month on local marketing, but Ella Cafe reserves the right to require franchisees to spend at least 3% of gross sales each month. Ella Cafe has the sole discretion to determine what activities constitute "marketing" under this requirement. This means that Ella Cafe has broad authority to dictate how franchisees market their businesses, ensuring brand consistency and adherence to the franchisor's marketing strategies. The initial market introduction program will cost a minimum of $5,000.