Is Extreme Art Studio required to contribute to the Brand Fund for company-owned or affiliate-owned businesses?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, Extreme Art Studio businesses owned by the company or its affiliates are not required to contribute to the Brand Fund on the same basis as franchisees. While franchisees must contribute 1% of their gross sales to the Brand Fund, Extreme Art Studio and its affiliates have the option, but not the obligation, to contribute.
This policy could impact franchisees because if company-owned or affiliate-owned studios do not contribute to the Brand Fund, the financial burden of national advertising and marketing falls more heavily on the franchisees. This might lead to concerns about the equitable distribution of costs and benefits related to brand promotion.
Prospective franchisees should consider this discrepancy when evaluating the overall value and fairness of the franchise agreement. It would be prudent to inquire about the historical contribution practices of company-owned and affiliate-owned studios to better understand the potential financial implications for individual franchisees.