May Endless Summer Sweets establish a Marketing Fund?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
The Marketing Fund will be spent at Franchisor's sole discretion, and Franchisor is not a fiduciary with respect to the Marketing Fund.
- (d) Contribution by Other Outlets.
Franchisor is not obligated to (i) have all other Endless Summer Sweets businesses (whether owned by other franchisees or by Franchisor or its affiliates) contribute to the Marketing Fund, or (ii) have other Endless Summer Sweets businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as Franchisee.
- (e) Surplus or Deficit.
Franchisor may accumulate funds in the Marketing Fund and carry the balance over to subsequent years.
If the Marketing Fund operates at a deficit or requires additional funds at any time, Franchisor may loan such funds to the Marketing Fund on reasonable terms.
- (f) Financial Statement.
Franchisor will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close Franchisor's fiscal year and will provide the financial statement to Franchisee upon request.
- 9.4 Market 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 thirty (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.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, Endless Summer Sweets has the option to establish a Marketing Fund. The FDD states that the Marketing Fund will be managed at Endless Summer Sweets' discretion, and they are not considered a fiduciary concerning the fund. This means Endless Summer Sweets has considerable control over how the marketing funds are spent.
Endless Summer Sweets is not obligated to ensure that all Endless Summer Sweets businesses, whether franchised or company-owned, contribute to the Marketing Fund. Additionally, the contribution amounts or rates may vary among different Endless Summer Sweets businesses. This could lead to some franchisees contributing more or less than others, potentially affecting the overall marketing efforts in different regions.
Endless Summer Sweets can accumulate funds within the Marketing Fund, carrying over any surplus to subsequent years. Conversely, if the Marketing Fund faces a deficit or requires additional funds, Endless Summer Sweets has the option to loan funds to the Marketing Fund under reasonable terms. Franchisees are entitled to receive an unaudited annual financial statement of the Marketing Fund within 120 days of the close of Endless Summer Sweets' fiscal year, provided they request it. This allows franchisees to stay informed about the fund's financial status and how the money is being managed.
Endless Summer Sweets may also establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative exists in the franchisee's area when they start operating, they must join immediately. If one is created later, the franchisee has 30 days to join. Endless Summer Sweets will not require franchisees to be members of more than one Market Cooperative. Each Market Cooperative's organization, governance, and start date will be determined by Endless Summer Sweets. The franchisor may also require the Market Cooperative to adopt bylaws or regulations they prepare. Unless Endless Summer Sweets specifies otherwise, the activities of each Market Cooperative will be decided by a majority vote of its members, and Endless Summer Sweets is entitled to attend and participate in any meeting.