Are Lees Famous Recipe LFR Licensees required to make local advertising expenditures?

According to Lees Famous Recipe's 2025 Franchise Disclosure Document, LFR Licensees have specific advertising expenditure conditions based on agreements made in 2008. Currently, Lees Famous Recipe recommends franchisees spend at least 1% of gross sales weekly on local market advertising. However, Lees Famous Recipe retains the right to mandate that franchisees spend up to 1% of gross sales each week on approved local marketing, excluding on-site signs, telephone directory listings, and reduced-cost or free products. Alternatively, Lees Famous Recipe can require franchisees to pay this amount to the company, which will then spend it on local market advertising on the franchisee's behalf. Franchisees may need to provide quarterly documentation to Lees Famous Recipe as evidence of their local advertising expenditures.

However, the 2025 FDD states that in 2008, LFR Inc. entered into license agreements with the LFR Licensees that did not require them to make local advertising expenditures. As of December 31, 2024, there are 71 LFR Licensees operating under these terms. These LFR Licensees also do not have to participate in or pay fees to any local, regional, or other national advertising cooperative.

In summary, whether a Lees Famous Recipe franchisee is required to make local advertising expenditures depends on the specific terms of their agreement. Newer franchisees may be subject to the 1% recommendation or mandate, while those operating under the 2008 LFR License agreements are exempt from these requirements.