What expenses related to collateral maintenance can Mr. Sandless expend and charge to the franchisee?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
We have established a System-wide advertising fund (the "Advertising Fund") for the common benefit of System franchisees. You are required to participate in and contribute monthly to the Advertising
Fund an amount equal to one percent (1%) of your Gross Sales. You must pay the Advertising Fee in the same manner and at the same time as the Royalty Fees due under this Agreement. Any Businesses owned by us or our affiliates will contribute to the Advertising Fund on the same basis as our franchisees. The Advertising Fund will be administered as follows:
- 13.5.1 We will use Advertising Fund contributions, in our sole discretion, to develop, satisfy any and all costs of developing, preparing, producing, directing, administering, conducting, maintaining and distribute national, regional and/or local advertising and to create advertising materials and public relations programs which promote, in our sole judgment, the products and services offered by Mr.
Sandless Businesses and sales and marketing seminars and training programs of every kind and nature..
We have the sole right to determine contributions and expenditures from the Advertising Fund, or any other advertising program, and sole authority to determine, without limitation, the selection of the advertising materials and programs; provided, however, that we will make a good faith effort to expend Advertising Fund contributions in the general best interests of the System on a national or regional basis.
We may use the Advertising Fund to satisfy any and all costs of maintaining, administering, directing, preparing, and producing advertising, including the cost of preparing and producing television, radio, magazine, social media, newspaper and electronic advertising campaigns, direct mail and outdoor billboard advertising; public relations activities conducting marketing research, employing advertising agencies to assist therein; developing, enhancing and maintaining the Website; and personnel and other departmental costs for advertising that we internally administer or prepare.
Nevertheless, you acknowledge that neither you nor any other System franchisees will benefit directly or on a pro rata basis from such expenditures.
While we do not anticipate that any part of the Advertising Fund contributions will be used for advertising which is principally a solicitation for franchisees, we reserve the right to use the Advertising Fund for public relations or recognition of the Mr.
Sandless brand, for the creation and maintenance of a Website, a portion of which can be used to explain the franchise offering and solicit potential franchisees, and to include a notation in any advertisement indicating "Franchises Available."
- 13.5.2 We may periodically assist franchises to maintain high quality standards through customer surveys, customer interviews, and other similar initiatives ("Surveys").
The cost of such programs will be borne by the Advertising Fund.
The cost of these programs may be charged directly to you if your results of a Survey fall below System established minimum standards for such Surveys.
Any such fees charged will be contributed to the Advertising Fund.
- 13.5.3 We have the right to reimburse ourselves from the Advertising Fund contributions for such reasonable costs and overhead, if any, as we may incur in activities reasonably related to the direction and implementation of the Advertising Fund.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, the company has established an Advertising Fund to be used for the benefit of all franchisees within the Mr. Sandless system. Mr. Sandless has the sole right to determine how the Advertising Fund is spent. These expenditures can include the costs of creating and distributing advertising materials across various media such as television, radio, magazines, social media, and newspapers. The fund can also cover public relations activities, marketing research, website maintenance, and the personnel costs associated with administering these advertising efforts.
However, the FDD states that franchisees may not directly benefit from these expenditures on a pro rata basis. Mr. Sandless retains the right to use the Advertising Fund for public relations, brand recognition, website maintenance, and even to solicit potential franchisees.
Mr. Sandless may periodically conduct customer surveys and interviews to help franchises maintain quality standards. The costs of these surveys are typically covered by the Advertising Fund. However, if a franchisee's survey results fall below the system's minimum standards, the cost of these programs may be charged directly to the franchisee. Any fees charged to the franchisee for this reason will be contributed back into the Advertising Fund. Mr. Sandless also has the right to reimburse itself from the Advertising Fund for reasonable costs and overhead related to the direction and implementation of the fund.