What is the definition of 'Advertising Obligation' for an Engineering For Kids franchise?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
ion 9.4 below); and/or (c) spend amounts on local advertising (as described in Section 9.5 below) in such amounts as we designate under Section 9.2.1 below, provided that the amounts that we require will not, in the aggregate, exceed an amount equal to (i) four percent (4%) of the Gross Sales of the Franchised Business during the preceding Period, plus (if applicable) (ii) the amount by which the Minimum Local Ad Spend (as defined below) exceeds your then-current Local Ad Percentage Spend (as defined below) for the Period (the "Advertising Obligation").
- 9.2.1. We will specify the respective portions of the Advertising Obligation that you must contribute to the Brand Fund, contribute to any Regional Fund, and/or spend directly on local advertising and promotion, and we may adjust the respective portions from time to time. As of the Effective Date, the Advertising Obligations are allocated as: (a) contributions in the amount of two percent (2.0%) of your Gross Sales to the Brand Fund; and (b) expenditures on local advertising (in accordance with Section 9.5 below) in an amount equal to the greater of two percent (2.0%) of your Gross Sales for that Period (the "Local Ad Percentage Spend") or One Hundred Dollars ($100) (the "Minimum Local Ad Spend").
- 9.2.2. You understand that the Advertising Obligations are the amounts that we may require you to contribute or spend, and that these required amounts may not be suff
Source: Item 23 — RECEIPTS (FDD pages 53–138)
What This Means (2025 FDD)
According to Engineering For Kids's 2025 Franchise Disclosure Document, the 'Advertising Obligation' consists of contributions to the Brand Fund and local advertising expenditures. Franchisees are required to contribute two percent (2.0%) of their Gross Sales to the Brand Fund. Additionally, franchisees must spend on local advertising an amount equal to the greater of two percent (2.0%) of their Gross Sales for that period (referred to as the "Local Ad Percentage Spend") or One Hundred Dollars ($100) (referred to as the "Minimum Local Ad Spend").
Engineering For Kids retains the right to adjust the portions of the Advertising Obligation that franchisees must contribute to the Brand Fund, any Regional Fund, or spend directly on local advertising and promotion. However, the document specifies that the required amounts may not always be sufficient to achieve adequate exposure for the services offered by the franchised business. Franchisees have the option to spend additional amounts on advertising to promote their business and services within their territory.
It's important to note that any additional amounts spent on local advertising beyond what is required as part of the Advertising Obligations will not reduce the franchisee's obligations to contribute to the Brand Fund or any applicable Regional Fund. This means that franchisees need to carefully manage their advertising budget to meet both the mandatory obligations and any additional advertising they deem necessary for their business growth.