What is the purpose of the 'Marketing Fund' for Fly To Fit franchisees?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchise.** Fly To Fit Franchise may use any marketing materials or campaigns developed by or on behalf of Franchisee, and Franchisee hereby grants an unlimited, perpetual, royalty-free license to Fly To Fit Franchise for such purpose.
- 9.3 Marketing Fund. Fly To Fit Franchise may establish a Marketing Fund to promote the System on a local, regional, national, and/or international level. If Fly To Fit Franchise has established a Marketing Fund:
- (a) Separate Account. Fly To Fit Franchise shall hold the Marketing Fund Contributions from all franchisees in one or more bank accounts separate from Fly To Fit Franchise's other accounts.
- (b) Use. Fly To Fit Franchise shall use the Marketing Fund only for marketing, advertising, and public relations materials, programs and campaigns (including at local, regional, national, and/or international level), and related overhead. The foregoing includes such activities and expenses as Fly To Fit Franchise reasonably determines, and may include, without limitation: development and placement of advertising and promotions; sponsorships; contests and sweepstakes; development of décor, trade dress, Marks, and/or branding; development and maintenance of brand websites; social media; internet activities; e-commerce programs; search engine optimization; market research; public relations, media or agency costs; trade shows and other events; printing and mailing; and administrative and overhead expenses related to the Marketing Fund (including the compensation of Fly To Fit Franchise's employees working on marketing and for accounting, bookkeeping, reporting, legal and other expenses related to the Marketing Fund).
- (c) Discretion. Franchisee agrees that expenditures from the Marketing Fund need not be proportionate to contributions made by Franchisee or provide any direct or indirect benefit to Franchisee. The Marketing Fund will be spent at Fly To Fit Franchise's sole discretion, and Fly To Fit Franchise has no fiduciary duty with regard to the Marketing Fund.
- (d) Contribution by Other Outlets. Fly To Fit Franchise is not obligated to (i) have all other Fly To Fit businesses (whether owned by other franchisees or by Fly To Fit Franchise or its
affiliates) contribute to the Marketing Fund, or (ii) have other Fly To Fit businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as Franchisee.
- (e) Surplus or Deficit. Fly To Fit Franchise may accumulate funds in the Marketing Fund and carry the balance over to subsequent years. If the Marketing Fund operates at a deficit or requires additional funds at any time, Fly To Fit Franchise may loan such funds to the Marketing Fund on reasonable terms.
- (f) Financial Statement. Fly To Fit Franchise will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of Fly To Fit Franchise's fiscal year and will provide the financial statement to Franchisee upon request.
- 9.4 Market Cooperatives. Fly To Fit Franchise may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the Marketing Fund is used to promote the Fly To Fit system at the local, regional, national, and/or international level. Fly To Fit uses the Marketing Fund for marketing, advertising, and public relations materials, programs, and campaigns, including related overhead. These activities and expenses include the development and placement of advertising and promotions, sponsorships, contests and sweepstakes, and the development of décor, trade dress, Marks, and/or branding. The fund also covers the development and maintenance of brand websites, social media, internet activities, e-commerce programs, search engine optimization, market research, public relations, media or agency costs, trade shows and other events, printing and mailing, and administrative and overhead expenses related to the Marketing Fund, including employee compensation and accounting expenses.
Fly To Fit maintains discretion over how the Marketing Fund is spent, and expenditures do not need to be proportionate to individual franchisee contributions or provide direct benefits to each franchisee. Fly To Fit is not obligated to have all Fly To Fit businesses contribute to the Marketing Fund or contribute the same amount. The franchisor may accumulate funds in the Marketing Fund and carry the balance over to subsequent years or loan funds to the Marketing Fund if it operates at a deficit.
Within 120 days of the close of Fly To Fit's fiscal year, Fly To Fit will prepare an unaudited annual financial statement of the Marketing Fund and provide it to franchisees upon request. Franchisees are required to contribute to the Marketing Fund. The Marketing Fund contribution is 1% of the franchisee's gross sales, paid at the same time as the royalty fee. In addition to the Marketing Fund, Fly To Fit may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative exists in the franchisee's area, membership is mandatory.