Are franchisor-owned Extreme Art Studio outlets required to contribute to the Brand Fund?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
We have a Brand Fund for marketing, developing and promoting the System, the Marks and Extreme Art Studio Businesses. You must pay one percent (1%) of your Gross Sales for the Brand Fund ("Brand Fund Contribution"). Your contribution to the Brand Fund will be in addition to all other advertising requirements set out in this Item 11. Each franchisee will be required to contribute to the Brand Fund, but certain franchisees may contribute on a different basis, depending on when they signed their Franchise Agreement. Franchisor-owned outlets may, but are not required to, contribute to the Brand Fund on the same basis as franchisees. Extreme Art Studio Businesses will contribute to the same Brand Fund.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–37)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, franchisor-owned outlets may, but are not required to, contribute to the Brand Fund on the same basis as franchisees. All franchisees are required to contribute to the Brand Fund, but certain franchisees may contribute on a different basis, depending on when they signed their Franchise Agreement.
The Brand Fund is used for marketing, developing, and promoting the Extreme Art Studio system, marks, and businesses. Franchisees must pay one percent (1%) of their gross sales to the Brand Fund, which is in addition to other advertising requirements.
This means that while franchisees must contribute a percentage of their gross sales to the Brand Fund, Extreme Art Studio retains the discretion to decide whether its own outlets will contribute. This could potentially give franchisor-owned locations a financial advantage over franchised locations, as they may not have the additional 1% expense. However, it also allows Extreme Art Studio to strategically invest in the Brand Fund as needed.