If Extreme Art Studio terminates the Brand Fund, how will the unspent monies be distributed?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.3.9 We may at any time defer or reduce contributions of an Extreme Art Studio Business franchise owner and, upon 30 days' prior written notice to you, reduce or suspend Brand Fund Contributions and operations for one or more periods of any length and terminate (and, if terminated, reinstate) the Brand Fund. If we terminate the Brand Fund, we will distribute all unspent monies to our franchise owners, and to us and our affiliates, in proportion to their, and our, respective Brand Fund Contributions during the preceding 12-month period.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, if Extreme Art Studio terminates the Brand Fund, all unspent monies will be distributed to the franchise owners, Extreme Art Studio, and its affiliates. The distribution will be proportional to their respective Brand Fund contributions during the 12-month period preceding the termination.
For a prospective franchisee, this means that if the Brand Fund is terminated, they could receive a portion of the unspent funds back. The amount they receive will depend on how much they contributed to the Brand Fund compared to the contributions of other franchisees, Extreme Art Studio, and its affiliates during the previous year. This clause ensures that franchisees receive some benefit from the Brand Fund even if it is discontinued.
It is important to note that Extreme Art Studio has the right to terminate the Brand Fund at any time, with 30 days' prior written notice to the franchisees. This provision provides Extreme Art Studio with flexibility in managing its marketing and advertising strategies. Franchisees should consider this possibility and its potential impact on their marketing efforts and financial returns.