Does Floyds 99 control the allocation of advertising from the National Marketing Fund?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
ill be subject to the same late charges and interest as the Royalties, in an amount and manner set forth in Section 12.3 above.
- f. Upon the request of the Franchisee, the Franchisor will make available to the Franchisee, no later than 120 days after the end of each fiscal year, an unaudited financial statement which indicates how the National Marketing Fund has been spent.
- g. The Franchisor shall direct all advertising and marketing programs financed by the National Marketing Fund, with sole discretion over the creative concepts, materials and endorsements used therein, geographic, market and media placement and allocation, and the administration thereof. The Franchisee agrees that the National Marketing Fund may be used to pay the costs of preparing and producing video, audio and written advertising materials, and Electronic Advertising (as defined in Section 13.6), including website design and maintenance and communication by social media and electronic mail; agency costs and commissions; implementing and administering gift card and stored value card programs and customer loyalty programs; creating and distributing proprietary in-shop music streaming programs; employee incentives and retention programs; training programs; administering multi-regional advertising programs, including, without limitation, purchasing and placing direct mail and other media advertising and employing advertising agencies and in-house staff to assist therewith; and supporting public relations, market research, brand recognition, third-party shopping services, and other advertising and marketing activities.
- h. The National Marketing Fund shall be accounted for separately from the Franchisor's other funds and shall not be used to defray any of the Franchisor's general operating expenses, except for such reasonable administrative costs, salaries and overhead as the Franchisor may incur in activities related to the administration of the National Marketing Fund and the implementation of its programs, including, without limitation, conducting market research, incurring related accounting and legal expenses, preparing material and collecting and accounting for National Marketing Fund contributions. The Franchisor may spend in any fiscal year an amount greater or less than the aggregate contribution of all FLOYD'S 99 Shops to the National Marketing Fund in that year and the National Marketing Fund may borrow from the Franchisor or other lenders to cover deficits or cause the National Marketing Fund to invest any surplus for future use. All interest earned on monies contributed to the National Marketing Fund will be first used to pay costs.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, Floyds 99 maintains sole discretion over the advertising and marketing programs financed by the National Marketing Fund. This control extends to the creative concepts, materials, endorsements, geographic placement, market placement, media allocation, and overall administration of these programs. Floyds 99 can use the National Marketing Fund to cover various costs, including the production of advertising materials (video, audio, written, and electronic), agency fees, loyalty programs, in-shop music, employee incentives, training, and multi-regional advertising efforts.
The National Marketing Fund is kept separate from Floyds 99's other funds but can be used to cover reasonable administrative costs, salaries, and overhead related to the fund's management. Floyds 99 has the flexibility to spend more or less than the total contributions from franchisees in any given year and can borrow or invest funds to manage deficits or surpluses. Any interest earned on the fund is first used to cover costs. Floyds 99 also has the option to incorporate the fund or operate it through a separate entity.
This arrangement means that as a Floyds 99 franchisee, you contribute to the National Marketing Fund, but Floyds 99 decides how those funds are spent. While the intention is to maximize brand recognition and customer patronage, there's no guarantee that your specific location will directly benefit from the advertising or that the spending in your area will be proportional to your contributions. Franchisees need to be aware that Floyds 99 has significant control over these marketing efforts and that the fund is not treated as a trust with fiduciary duties to the franchisees.