What is the purpose of the Brand Development Fund for Fitstop?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
Brand Development Fund
We currently expect and plan to administer a brand development fund (the "Fund") for the benefit of the entire System. We use the Fund to meet certain costs related to maintaining, administering, directing, conducting and preparing advertising, marketing, public relations, and/or promotional programs and materials, and any other activities which we believe will enhance the image of the System. Your current Fund Contribution will be two percent (2%) of the Gross Revenue generated by your Franchised Business.
Currently, affiliate-owned locations may – but are not obligated to – contribute to the Fund in the same amount and manner as System Franchised Businesses. Other System franchisees' respective Fund contributions may be calculated at a different rate or on a different basis and, under limited circumstances, certain franchisees may not be required to pay Fund fees.
We have full discretion to settle or forgive any accrued and unpaid Fund contributions owed by a franchisee. With any advertising funds paid, we have sole discretion as to how and where the money is spent to promote, enhance, or further the growth of the system, including, without limitation, promotional marketing, public relationships, and advertising expenses, hiring marketing, public relations and advertising agencies and internal personnel to assist in developing the brand name and average unit volumes, expenses associated with listings in telephone books, subsidies of premiere/marquis locations designed to garner media attention and promote the brand name, travel expenses in connection with promotions and marketing meetings, training, development of Proprietary Marks and trademarked materials, production of circulars, media, advertisements, coupons, and promotional materials (including point of purchase materials), market research, developing training tools designed to assist System franchisees, the cost of developing and maintaining an Internet website and other digital marketing tools, developing and deploying mystery shopper programs and for any other use we determine. Additionally, we can use the Fund to pay for expenses incurred in developing and maintaining non-franchise sales portion of our primary brand website. We are not required to spend any advertising funds in your specific area or territory. Materials provided by the Fund to all Franchisees may include video and audio tapes, mats, posters, banners, and miscellaneous point-of-sale items. You will receive one sample of each at no charge.
We may occasionally provide for placement of advertising on behalf of the entire franchise system, including Franchisees. However, most placement is on a local basis, typically by local advertising agencies hired by individual Franchisees or advertising cooperatives.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 24–35)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the Brand Development Fund is used for the benefit of the entire Fitstop system. Fitstop uses the fund to cover costs related to advertising, marketing, public relations, promotional programs, and materials. These activities are intended to enhance the image of the Fitstop system.
A franchisee's contribution to the Fund is currently 2% of their Franchised Business's Gross Revenue. While affiliate-owned locations may contribute to the Fund, they are not obligated to do so. The FDD states that other franchisees' contributions may be calculated differently, and some may not be required to pay Fund fees under certain circumstances.
Fitstop has the discretion to decide how the money is spent to promote the Fitstop system's growth. This includes promotional marketing, public relations, advertising expenses, hiring agencies and personnel, listings in telephone books, subsidies for premiere locations, travel expenses for promotions and marketing meetings, development of trademarks, production of promotional materials, market research, development of training tools, website maintenance, and mystery shopper programs. Fitstop is not required to spend any advertising funds in a franchisee's specific area or territory.
It's important to note that Fitstop has the right to modify or discontinue the Fund. Franchisees can request an annual accounting of the Fund, in writing, to Fitstop's President 120 days after the fiscal year end. As of the end of the fiscal year ending December 31, 2023, Fitstop had not yet established a Fund, so no contributions were collected or expended.