Who has discretion over how the Endless Summer Sweets Marketing Fund is spent?

According to Endless Summer Sweets' 2024 Franchise Disclosure Document, the franchisor has sole discretion over how the Marketing Fund is spent. Specifically, the FDD states that the Marketing Fund will be spent at the Franchisor's sole discretion, and the Franchisor is not a fiduciary with respect to the Marketing Fund. This fund is established to promote the Endless Summer Sweets system at various levels, including local, regional, national, and international.

This means that as an Endless Summer Sweets franchisee, you will contribute to the Marketing Fund, but you will have limited to no control over how those funds are used. The franchisor decides how the money is allocated to marketing, advertising, and public relations efforts. These efforts can include a wide range of activities, such as developing advertising campaigns, sponsoring events, maintaining websites, and conducting market research.

Furthermore, the FDD clarifies that the expenditures from the Marketing Fund do not need to be proportionate to a franchisee's contributions, nor do they need to provide any direct or indirect benefit to the franchisee. This is a common practice in franchising, where the goal of the marketing fund is to benefit the brand as a whole, which may not always translate to direct benefits for each individual franchisee. While the franchisor will provide an unaudited annual financial statement of the Marketing Fund to franchisees upon request, the ultimate decision-making power regarding the fund's use rests solely with the franchisor.

Endless Summer Sweets may also establish market advertising and promotional cooperative funds (“Market Cooperative”) in any geographical areas. Each Market Cooperative will be organized and governed in a form and manner and shall commence operations on a date determined by Endless Summer Sweets. Unless otherwise specified by Endless Summer Sweets, the activities carried on by each Market Cooperative shall be decided by a majority vote of its members. Endless Summer Sweets will be entitled to attend and participate in any meeting of a Market Cooperative.