What is the dependency between the Ella Cafe Brand Marketing Fee and the Royalty Fee?
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.
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 and Royalty Fee are linked in terms of payment timing. The Brand Marketing Fee is to be contributed weekly, with the amount specified by Ella Cafe, but not exceeding 3% of Gross Sales. This contribution is due at the same time as the Royalty Fee, which is 7% of Gross Sales.
This means that franchisees must calculate and submit both fees simultaneously, streamlining the payment process. The Brand Marketing Fee is used for System-wide marketing, advertising, and promotions, overseen by Ella Cafe, who has control over the creative aspects and media used. However, Ella Cafe does not guarantee any direct benefit to individual franchisees from these marketing expenditures, and the programs can be local, regional, or System-wide.
Prospective franchisees should note that Ella Cafe can change the Brand Marketing Fee requirements, but they must provide at least 30 days' notice before implementing any changes. 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 the franchisee upon written request.
In addition to the Brand Marketing Fee, franchisees may also be required to participate in local marketing cooperatives if Ella Cafe establishes them in their geographic area. Franchisees are obligated to join these cooperatives and may be required to adhere to bylaws or regulations set by Ella Cafe. Franchisees are also required to cooperate with Ella Cafe in e-commerce and social media advertising programs and pay the associated costs, which are separate from the Brand Marketing Fee.