Can Floyds 99 verify National Marketing Contribution payments?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
ance with all of the Franchisor's standards and specifications. The Franchisee acknowledges and agrees that participation in a gift card or customer loyalty card program, whether voluntary or required, may require the Franchisee to pay fees, enter into agreements or purchase equipment or other products or services from the Franchisor or from a designated third-party supplier.
13.2 National Marketing Contribution. The Franchisee shall make contributions ("National Marketing Contributions") to a national advertising fund established by the Franchisor ("National Marketing Fund"). The amount of the National Marketing Contribution is currently 1.5% of Franchisee's Gross Sales and can be changed by Franchisor from time to time. The National Marketing Contribution
shall be paid to the Franchisor in addition to Royalties and in addition to any amounts spent on local or regional advertising, and the following terms and conditions shall apply:
- a. The National Marketing Contribution shall be payable concurrently with (or on another designated Due Date), and in the same manner as, the payment of the Royalties as described in Section 12.3.
- b. When combined with Franchisee's Local Advertising Allocation (described below in Section 13.3), Franchisee's total advertising obligation (the National Marketing Contribution plus Local Advertising Allocation) will not exceed 4% of Franchisee's Gross Sales.
- c. Franchisor may increase the amount of the National Marketing Contribution (up to a maximum of 3% of Gross Sales) by providing Franchisee with at least 90 days' prior written notice.
- d. The Franchisor shall have the right to verify National Marketing Contribution payments from time to time as it deems necessary, in any reasonable manner.
- e. The National Marketing Contributions will 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.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, Floyds 99 has the right to verify National Marketing Contribution payments from its franchisees. The FDD states that Floyds 99 can verify these payments as it deems necessary, using any reasonable method. Additionally, franchisees are obligated to submit an accounting of local advertising expenditures to Floyds 99 within 20 days after each calendar quarter's end.
This verification right allows Floyds 99 to ensure that franchisees are meeting their financial obligations to the National Marketing Fund. The National Marketing Fund is used for advertising and marketing programs directed by Floyds 99, with the aim of maximizing brand recognition and customer patronage. These programs can include creating advertising materials, electronic advertising, gift card programs, and market research.
Furthermore, Floyds 99 has broad authority over how payments from franchisees are applied. The document specifies that Floyds 99 has sole discretion to apply payments to any past due debts, including royalties, National Marketing Contributions, or product purchases. This means that even if a franchisee designates a payment for a specific purpose, Floyds 99 can redirect it to cover outstanding balances.
To ensure transparency, Floyds 99 will provide franchisees with an unaudited financial statement within 120 days after the end of each fiscal year, detailing how the National Marketing Fund was spent. This statement offers franchisees some insight into the fund's usage, although Floyds 99 retains significant control over the fund's administration and direction.