Who adopts and amends the annual budget for the operation of AdCom for Lees Famous Recipe?

According to Lees Famous Recipe's 2025 Franchise Disclosure Document, the Board of Directors is responsible for adopting and amending the annual budget for the operation of AdCom (Lee's Famous Recipe Advertising Cooperative, Inc.). The FDD specifies that the AdCom budget will operate on a cash basis, ensuring that budgeted expenditures do not exceed budgeted revenues. Any surplus funds will be retained in AdCom's accounts from year to year.

This means that prospective Lees Famous Recipe franchisees should understand that the Board, not individual franchisees, controls the advertising budget. The financial structure ensures that AdCom operates within its means, with any extra funds being carried over for future use. Franchisees contribute to AdCom, and while the cooperative aims to benefit all members, there's no guarantee that advertising expenditures in a specific area will proportionally match the contributions from members in that area.

This structure is fairly common in franchising, where advertising cooperatives pool resources for marketing efforts. However, franchisees have limited direct control over the budget and its allocation. Therefore, it is important for prospective franchisees to understand how AdCom operates, how the board is composed, and what influence franchisees have in the decision-making process regarding the advertising budget and strategies. Franchisees should inquire about the historical performance of AdCom and its impact on sales and brand awareness.