Is there a maximum amount for the Brand Fund Contribution that Extreme Art Studio can charge?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
OTHER FEES**
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty(2) | The greater of 8% of Gross Sales ("Royalty") or $500 per month ("Minimum Royalty") | Within five days after the end of the calendar month | The Royalty is based on "Gross Sales" during the previous month. Gross Sales are defined in Note 2. You must pay your Royalty via electronic funds transfer ("EFT"), or such other manner we may prescribe. The Minimum Royalty begins six months after you open your first Extreme Art Studio Business and immediately after you open additional Extreme Art Studio Businesses. |
| Brand Fund Contribution(2) | 1% of Gross Sales | Same as Royalty | This contribution will be used for a system-wide "Brand Fund" for our use in promoting and building the Extreme Art brand. |
| Local Advertising Payment | The difference between the amount you spent on local advertising each month and your required local advertising expenditure ($500 per month per Extreme Art Studio Business) | Payable after receipt of invoice | If you fail to meet your required local advertising requirement on local advertising, you must pay us the difference between the amount you spent and the required advertising expenditure, which will be contributed to the Brand Fund or to us. |
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Local and Regional Advertising Cooperatives(3) | Established by cooperative members, between 0.5% and 1% of Gross Sales | Same as Royalty (or as we designate) | We currently do not have a cooperative but reserve the right to require one to be established in the future. |
Source: Item 6 — OTHER FEES (FDD pages 13–18)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, the Brand Fund Contribution is 1% of Gross Sales. This contribution is used for a system-wide Brand Fund that Extreme Art Studio uses to promote and build the Extreme Art brand. This fee is due at the same time as the royalty payments, which is within five days after the end of the calendar month.
In addition to the standard Brand Fund Contribution, Extreme Art Studio franchisees may also be required to contribute to local and regional advertising cooperatives, should they be established. The contribution amount for these cooperatives is determined by the members, and it will be between 0.5% and 1% of Gross Sales. Each Extreme Art franchisee and each Extreme Art Studio Business that Extreme Art Studio owns will have one vote for each Extreme Art Studio Business operated in the designated market.
If an Extreme Art Studio franchisee fails to meet their required local advertising expenditure of $500 per month per Extreme Art Studio Business, they must pay Extreme Art Studio the difference between the amount they spent and the required advertising expenditure. This difference will be contributed to the Brand Fund or to Extreme Art Studio. This provides an alternative mechanism for contributing to the Brand Fund if local advertising requirements are not met through direct spending.