Can Ella Cafe promise Ella Cafe franchisees a prorata benefit from advertising?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- (a) We will control the creative concepts and the materials and media to be used, and we will determine the placement and allocation of advertisements. We may use print, television, radio, Internet or other media for advertisements and promotions. We may engage in local, regional, or national advertising. We are not required to spend any particular amount on advertising in your area or Designated Area and we cannot promise any franchisee a prorata benefit.
- (b) We may use your Brand Marketing Fee to meet or reimburse us for any cost of conducting market research, producing, maintaining, administering and directing consumer advertising (including the cost of preparing and conducting television, radio, Internet, magazine, direct mail and newspaper advertising campaigns and other public relations activities; hosting an Internet web page of similar activities; employing advertising agencies to assist therein; providing promotional brochures and other marketing materials to franchisees;). We will not use Brand Marketing Fee monies 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 our web
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 24–33)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, Ella Cafe cannot promise franchisees a pro-rata benefit from advertising. The document states that Ella Cafe will control the creative concepts, materials, and media used for advertisements, and will determine the placement and allocation of advertisements. They may use various media such as print, television, radio, and the Internet for advertising and promotions, and may engage in local, regional, or national advertising.
Ella Cafe is not required to spend any specific amount on advertising in a franchisee's area. The Brand Marketing Fee, which franchisees contribute to, is used for various marketing-related costs, including market research, producing advertising materials, and maintaining a website. These fees are not maintained separately as an advertising fund or trust, and the contributions are not audited.
While Ella Cafe does not guarantee a specific return on advertising spend for each franchisee, franchisees can request an account of how the Brand Marketing Fee monies were spent during a calendar year. This provides some transparency, even though a pro-rata benefit is not assured. Franchisees are also required to spend a minimum of 2% of their gross sales on local advertising, which Ella Cafe must approve.