Can Fitstop use the Brand Development Fund to pay for expenses incurred in developing and maintaining the non-franchise sales portion of their primary brand website?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
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, Fitstop has the authority to use the Brand Development Fund to cover expenses related to the development and maintenance of the non-franchise sales portion of their primary brand website. This means that franchisee contributions to the fund may be used for activities that support the brand's overall presence, including aspects not directly related to franchise sales.
Fitstop retains sole discretion over how advertising funds are spent, including for promotional marketing, public relations, advertising expenses, and the development of the brand name. This discretion extends to expenses associated with maintaining an internet website and other digital marketing tools. While Fitstop is not required to spend advertising funds in any specific area or territory, the fund is intended to promote and enhance the growth of the Fitstop system as a whole.
As a prospective franchisee, it's important to understand that a portion of your gross revenue (currently 2%) will contribute to this fund, and that Fitstop has broad authority over how these funds are used. While the fund aims to benefit the entire system, there's no guarantee that your specific location or territory will directly benefit from each expenditure. Franchisees can request an annual accounting of the fund, providing some transparency into how the contributions are being utilized. It is important to note that as of the end of the fiscal year 2023, Fitstop had not yet established a fund, so no contributions were collected or expended.