Can Mr. Sandless use the Advertising Fund for advertising that is principally a solicitation for franchisees?

According to Mr. Sandless's 2025 Franchise Disclosure Document, while it is not anticipated that the Advertising Fund will be used primarily to solicit new franchisees, Mr. Sandless retains the right to use the fund for public relations, brand recognition, and to maintain a portion of their website to explain the franchise offering and solicit potential franchisees. They can also include a notation in any advertisement indicating "Franchises Available." This means that while the main goal of the Advertising Fund is to promote Mr. Sandless's services to customers, a portion of it can be used to attract new franchisees.

Mr. Sandless has the right to reimburse themselves from the Advertising Fund for the costs of developing, producing, and distributing advertising materials, as well as collecting the Advertising Fee. Businesses owned by Mr. Sandless or its affiliates contribute to the fund on the same basis as franchisees. The fund is kept separate from other funds and is accounted for separately. Any unspent funds at the end of the year are carried over to the following year. Mr. Sandless will provide an annual, unaudited statement of funds collected and costs incurred upon written request. For the fiscal year ending December 31, 2024, 100% of the Advertising Fund was spent on online advertising on Google and YouTube, Yahoo and Bing for customer leads.

Franchisees are required to contribute to the Advertising Fund an amount equal to 1% of their Gross Sales each month, in addition to their local advertising requirement of spending a minimum of $1,500 each month for local advertising. Mr. Sandless has full discretion over how the Advertising Fund is spent, including creative concepts, materials, media used, and their placement and allocation. This setup is fairly typical in franchising, where franchisees contribute to a central fund managed by the franchisor for system-wide marketing efforts. However, the franchisor's discretion in spending the fund and the lack of an audited statement are points to consider.

Mr. Sandless also details that franchisees are prohibited from using social media to promote their business without prior written consent. Additionally, franchisees are not permitted to have an individual website related to the business or to establish a URL incorporating any variation of the "Mr. Sandless" name or the Proprietary Mark without prior written approval. Mr. Sandless has established an internet "pay per click" advertising program in which franchisees may choose to participate, with the costs related to their business potentially included in their Local Advertising Requirement.