What is the required action for a Pearce Bespoke franchisee if they cannot participate in a regional cooperative advertising program?
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 Pearce Bespoke's 2025 Franchise Disclosure Document, if a franchisee's annual contributions to cooperative advertising programs are less than 5% of gross sales, or if they cannot participate in a regional cooperative advertising program because one hasn't been established in their area, they are obligated to conduct local advertising and marketing activities. These local marketing activities do not reduce or eliminate the franchisee's obligations under Section 6(A) of the franchise agreement. These local marketing expenditures include advertising, merchandising, sales promotion, and other forms of marketing at the local level.
Within 30 days following the end of each calendar quarter, the Pearce Bespoke franchisee must provide the franchisor with an accounting of the monies spent for approved regional cooperative advertising and local marketing for the preceding calendar quarter. If the franchisee fails to spend at least 5% of its gross sales for the calendar quarter on approved regional cooperative advertising or local marketing, they may be required to deposit the difference with the franchisor.
The franchisor will then spend this deposited amount on advertising or marketing deemed appropriate for the franchisee's business, making reasonable efforts to spend the amounts in the franchisee's local geographic area. This ensures that even if a regional program is unavailable, the franchisee is still meeting the required advertising expenditure, and the franchisor has control over how those funds are used to promote the business.