Does the Mr. Sandless FDD guarantee that franchisees will benefit directly from Advertising Fund expenditures?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to the 2025 Mr. Sandless FDD, franchisees are not guaranteed to directly benefit from Advertising Fund expenditures. While Mr. Sandless 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, the document explicitly states that neither franchisees nor any other System franchisees will benefit directly or on a pro rata basis from such expenditures.
Mr. Sandless retains sole authority to determine the selection of advertising materials and programs. The Advertising Fund can be used for various advertising costs, including television, radio, magazine, social media, newspaper, and electronic advertising campaigns, as well as public relations activities, marketing research, website maintenance, and personnel costs.
Franchisees are required to contribute to the Advertising Fund, with the amount equal to one percent (1%) of their Gross Sales. Despite contributing to the fund, franchisees should understand that the benefits they receive from the fund's expenditures may not be direct or proportional to their contributions. This is a common practice in franchising, where advertising is often designed to benefit the system as a whole rather than individual franchisees directly.