For what purposes does Pearce Bespoke use the brand fund fees collected from franchisees?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
the minimum fee will be $200 per week. Franchise royalties are collected and recognized as revenue on a weekly basis for the previous week's sales.
Brand Fund Revenue
Brand fund revenue is calculated at 2% of franchisee gross revenue (as defined in the franchise agreement). The Company may charge an additional brand fund fee not to exceed 3% of franchisee gross revenue. The Company will use the brand fund fee to conduct advertising research and public relations campaigns, develop websites and other online media programs, develop marketing materials such as television, radio, internet, and print advertising production, and promotional materials for use in each Franchisee's local market, and implement advertising and marketing campaigns. Brand fund revenues are collected and recognized as revenue on a weekly basis for the previous week's sales.
Local Area Marketing Revenue
Local area marketing revenue is calculated at 5% of franchisee gross revenue per month (as defined in the franchise agreement) and will begin in the first full month after the date the franchised business opens. Local area marketing revenue is recognized by the Company in the month charged.
Franchisees are required to participate in any local marketing cooperatives established by the Company.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the brand fund revenue, which is initially calculated at 2% of franchisee gross revenue, is used for specific advertising and marketing purposes. Pearce Bespoke may increase this fee up to 3% of gross revenue.
The FDD specifies that these funds are allocated to conduct advertising research, public relations campaigns, develop websites and online media programs, and create marketing materials. These materials include television, radio, internet, and print advertising, as well as promotional items intended for use in each franchisee's local market. The brand fund is also used to implement advertising and marketing campaigns.
Pearce Bespoke collects brand fund revenues weekly, recognizing them as revenue based on the previous week's sales. Funds collected but not yet spent are recorded as deferred revenue on the balance sheet. As of December 31, 2024, the deferred revenue was $0.