Can the Endless Summer Sweets Marketing Fund be used for local advertising?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
y prescribe. Franchisee shall implement any social media and marketing plans, or campaigns as determined by Franchisor.
- 9.2 Use by Franchisor. Franchisor may use any marketing materials or campaigns developed by or on behalf of Franchisee, and Franchisee hereby grants an unlimited, perpetual, royalty-free license to Franchisor for such purpose.
- 9.3 Marketing Fund. Franchisor may establish a Marketing Fund to promote the System on a local, regional, national, and/or international level. If Franchisor has established a Marketing Fund:
- (a) Separate Account. Franchisor shall hold the Marketing Fund Contributions from all franchisees in one or more bank accounts separate from Franchisor's other accounts.
- (b) Use. Franchisor shall use the Marketing Fund only for marketing, advertising, and public relations materials, programs and campaigns (including at local, regional, national, and/or international level), and related overhead. The foregoing includes such activities and expenses as Franchisor reasonably determines, and may include, without limitation: development and placement of advertising and promotions; sponsorships; contests and sweepstakes; development of décor, trade dress, Marks, and/or branding; development and maintenance of brand websites; social media; internet activities; e-commerce programs; search engine optimization; market research; public relations, media or agency costs; trade shows and other events; printing and mailing; and administrative and overhead expenses related to the Marketing Fund (including the compensation of Franchisor's employees working on marketing and for accounting, bookkeeping, reporting, legal and other expenses related to the Marketing Fund).
- (c) Discretion.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, the Marketing Fund can be used for local advertising. Specifically, the FDD states that the Marketing Fund can be used for marketing, advertising, and public relations materials, programs, and campaigns, including at the local level. This fund is intended to promote the Endless Summer Sweets system.
The franchisor has sole discretion over how the Marketing Fund is spent, and expenditures do not need to be proportionate to a franchisee's contributions or provide any direct benefit to the franchisee. This means that while a franchisee contributes to the fund, they may not directly see the benefits in their specific location. The franchisor is not a fiduciary with respect to the Marketing Fund.
In addition to the Marketing Fund, Endless Summer Sweets may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative exists for the franchisee's location when they start operating, they must immediately become a member. If a Market Cooperative is created later, the franchisee must join within 30 days. The franchisor will not require a franchisee to be a member of more than one Market Cooperative. The activities of each Market Cooperative are decided by a majority vote of its members, unless otherwise specified by the franchisor, who is entitled to attend and participate in any meeting of a Market Cooperative.