What is the definition of the 'Brand Fund' for Extreme Art Studio?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
If we do not approve of the materials within five days of our receipt of such materials, then they shall be deemed disapproved. You may not use any advertising, promotional or marketing materials that we have not approved or have disapproved.
9.3 BRAND FUND.
- 9.3.1 Recognizing the value of advertising and marketing to the goodwill and public image of Extreme Art Studio Businesses, we have established a national advertising and marketing fund ("Brand Fund") for marketing, developing and promoting the System, the Marks and Extreme Art Studio Businesses. You agree to contribute to the Brand Fund in an amount equal to one percent (1%) of your Gross Sales, due and payable in the same manner as the Royalty ("Brand Fund Contribution"). Extreme Art Studio Businesses owned by us or our affiliates may, but are not required to, contribute to the Brand Fund on the same basis as our franchisees.
- 9.3.2 We will direct all programs that the Brand Fund finances, with sole control over the creative concepts, materials and endorsements used, and their geographic, market and media placement and allocation. The Brand Fund may pay for preparing and producing video, audio and written materials and electronic media; developing, implementing and maintaining our System
Website (as defined in Section 9.5 below) or related websites that promote Extreme Art Studio Businesses and/or related strategies; administering regional and multi-regional marketing and advertising programs, including, without limitation, purchasing trade journal, direct mail, and other media advertising; using advertising, promotion and marketing agencies and other advisors to provide assistance; administering online advertising and marketing campaigns (including search engine, social media, email, and display ad campaigns); developing and maintaining application software designed to run on computers and similar devices, including tablets, smartphones and other mobile devices, as well as any evolutions or "next generations" of any such devices; to implement a loyalty program or other marketing programs designed to encourage the use of Extreme Art Studio Businesses; and supporting public relations, market research, and other advertising, promotion and marketing activities.
- 9.3.3 The Brand Fund periodically will give you samples of advertising, marketing, and promotional formats and materials at no cost that we may develop. The Brand Fund will sell you multiple copies of these materials at its direct cost of producing them, plus any related shipping, handling, and storage charges.
- 9.3.4 We will account for the Brand Fund separately from our other funds. We may use the Brand Fund to pay the reasonable salaries and benefits of personnel who manage and administer the Brand Fund, the Brand Fund's other administrative costs, travel expenses of personnel while they are on Brand Fund business, meeting costs, overhead relating to Brand Fund business, and other expenses that we incur in activities reasonably related to administering or directing the Brand Fund and its programs, including, without limitation, conducting market research; public relations; preparing advertising, promotion, and marketing materials; and collecting and accounting for Brand Fund Contributions.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, the Brand Fund is a national advertising and marketing fund established to promote the Extreme Art Studio system, marks, and businesses. Franchisees are required to contribute to the Brand Fund an amount equal to one percent (1%) of their Gross Sales, which is termed the 'Brand Fund Contribution'. These contributions are due and payable in the same manner as the royalty fees. Extreme Art Studio businesses owned by the company or its affiliates may contribute to the Brand Fund, but they are not required to do so.
The Brand Fund is used to finance various programs, including the creation of video, audio, and written materials, the development and maintenance of the Extreme Art Studio System Website, regional and multi-regional marketing and advertising programs, online advertising campaigns, and the development of application software for computers, tablets, smartphones, and other mobile devices. It also supports loyalty programs, public relations, market research, and other advertising, promotion, and marketing activities. Extreme Art Studio retains sole control over the creative concepts, materials, endorsements, and the geographic, market, and media placement and allocation of these programs.
The purpose of the Brand Fund is to maximize recognition of the Extreme Art Studio marks, increase patronage of Extreme Art Studio businesses, and enhance the Extreme Art Studio brand in general. While Extreme Art Studio aims to use the Brand Fund to develop advertising and marketing materials and programs that benefit all Extreme Art Studio businesses, it cannot guarantee that expenditures in any specific geographic area will be proportionate to the contributions from that area, or that any contributor will directly benefit in proportion to their contribution. The Brand Fund is accounted for separately from Extreme Art Studio's other funds and is not considered an asset of the company. Although not a trust, Extreme Art Studio holds all Brand Fund Contributions for the benefit of the contributors and uses them only for the described purposes.