factual

Does Hck Hot Chicken commingle Brand Fund contributions with its general operating funds?

Hck_Hot_Chicken Franchise · 2025 FDD

Answer from 2025 FDD Document

Franchisor will use the Brand Fund for national, regional, or local advertising, public relations or promotional campaigns or programs designed to promote and enhance the image, identity, or patronage of franchised, and Franchisor-owned (including Affiliate-owned) Restaurants.

Such expenditures may include: (a) the costs of maintaining, administering, directing and preparing the secret shopper initiatives and rewards program (this program will include cash rewards paid to the highest scoring restaurants that Franchisor suggests be distributed to franchisee's employees as bonuses at the applicable restaurants); (b) creative development, production and placement of print advertisements, commercials, musical jingles, decals, radio spots, audio advertising, point of purchase materials, direct mail pieces, literature, outdoor advertising, door hangers, electronic media advertisements, and other advertising and promotional material; (c) creative development, preparation, production and placement of video, audio and written materials and electronic media, (d) to purchase artwork and other components for advertising; (e) media placement and buying, including all associated expenses and fees; (f) administering regional and multiregional marketing and advertising programs; (g) market research, marketing studies and customer satisfaction surveys, including the use of secret shoppers; (h) development and production of, and, to the extent applicable, acquisition of, premium items, giveaways, promotions, contests, public relations events, and charitable or nonprofit events; (i) creative development of signage, posters, and individual decor items including wall graphics; (j) recognition and awards events and programs; (k) system recognition events, including periodic national and regional conventions and meetings; (l) website, extranet and/or Intranet development, implementation and maintenance; (m) development, implementation and maintenance of a website that permits electronic commerce, reservation system and/or related strategies; (n) retention and payment of advertising and promotional agencies and other outside advisors, including retainer and management fees; (o) public relations and community involvement activities and programs; (p) expenditures for activities conducted for the benefit of co-branding, or other arrangements where "HCK Hot Chicken" brand products and/or services are offered in conjunction with other marks or through alternative channels of distribution; (q) development, amendment and revisions to the standards, policies and procedures set forth in the HCK Hot Chicken Brand Standards Manual; (r) stadium promotion marketing fees; (s) payment to Franchisor or its Affiliates, for indirect costs and overhead incurred in connection with the operation of its creative department(s), if any, and the administration of the Brand Fund; (t) payments for corporate and storelevel hosted access from data hosted solutions providers; (u) gift card blanks; and (v) retention and payment of social media agencies.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)

What This Means (2025 FDD)

Based on the 2025 FDD, Hck Hot Chicken franchisees are required to make a Brand Fund Contribution, which is allocated to the Brand Fund. According to the FDD, Hck Hot Chicken will use the Brand Fund for advertising, public relations, and promotional campaigns to enhance the image of both franchised and company-owned restaurants.

The FDD specifies various expenditures that may be covered by the Brand Fund, including maintaining secret shopper programs, developing advertising materials, conducting market research, organizing promotional events, and maintaining websites. The Brand Fund can also be used for the development of the Hck Hot Chicken Brand Standards Manual, stadium promotion marketing fees, payment to Hck Hot Chicken or its affiliates for indirect costs, payments for corporate and store-level hosted access from data hosted solutions providers, gift card blanks, and retention and payment of social media agencies.

The FDD does not explicitly state whether Hck Hot Chicken commingles the Brand Fund with its general operating funds. However, it does state that the Brand Fund contributions will be administered as provided in Section 8.3 of the agreement. It also mentions that the Brand Fund can be used for payments to Hck Hot Chicken or its affiliates for indirect costs and overhead incurred in connection with the operation of its creative department(s), if any, and the administration of the Brand Fund. A prospective franchisee should seek clarification from Hck Hot Chicken regarding the specific handling and accounting of the Brand Fund to ensure full transparency.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.