Does the Pearce Bespoke Franchisor reserve the right to establish advertising cooperatives?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
To the extent Franchisee's annual contributions to cooperative advertising programs described in Section 6(A) above are less than five percent (5%) of the Gross Sales for the Pearce Bespoke Franchise, or if the Franchisee cannot participate in any regional cooperative advertising program because such a program has not been established in Franchisee's geographic area, Franchisee will then be obligated to conduct advertising and marketing activities in Franchisee's local geographic area; provided that Franchisee's local marketing activities will not reduce, eliminate, or otherwise impact Franchisee's obligations under Section 6(A) above. Franchisee's local marketing expenditures will include advertising, merchandising, sales promotion, and other forms of marketing at the local level.
Within thirty (30) days following the end of each calendar quarter, Franchisee will provide Franchisor with an accounting of the monies that it has spent for approved regional cooperative advertising and local marketing for the preceding calendar quarter. If Franchisee has failed to spend at least five percent (5%) of its Gross Sales for the calendar quarter for approved regional cooperative advertising or local marketing, Franchisee may be required to deposit with Franchisor the difference between what it should have spent for advertising and marketing during the calendar quarter and what it actually spent for advertising and marketing during the calendar quarter. Franchisor will spend such amount for any type of advertising or marketing that Franchisor deems appropriate for Franchisee's business, although Franchisor will use reasonable efforts to spend such amounts in Franchisee's local geographic area.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, Pearce Bespoke has the right to establish advertising cooperatives.
The FDD outlines that if a franchisee's annual contributions to cooperative advertising programs are less than 5% of gross sales, or if a regional cooperative advertising program hasn't been established in the franchisee's area, the franchisee must conduct local marketing activities. These local marketing activities don't reduce the franchisee's obligations under Section 6(A). Franchisees must provide an accounting of their spending on approved regional cooperative advertising and local marketing each quarter.
If a franchisee fails to spend at least 5% of their gross sales on approved regional cooperative advertising or local marketing, Pearce Bespoke may require the franchisee to deposit the difference with them. Pearce Bespoke will then spend that amount on advertising or marketing they deem appropriate for the franchisee's business, attempting to focus on the franchisee's local area. This gives Pearce Bespoke significant control over advertising funds if a franchisee doesn't meet the minimum spending requirements, ensuring that advertising efforts are maintained and aligned with the brand's overall strategy.