How does a Punch King Fitness franchisee contribute to the National Advertising Fund?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
B.National Advertising Contributions
Franchisee shall make National Advertising Contributions in the amount of 2% of Gross Revenues payable every month to such national advertising fund ("National Advertising Fund") as Franchisor may establish
for advertising for the System.
1. The National Advertising Fund shall be maintained and administered by Franchisor as follows*:*
2. Franchisee agrees and acknowledges that the National Advertising Fund is intended to maximize general public recognition and acceptance of the Marks for the benefit of all franchisees within the System or within a region, as the case may be, and that Franchisor is not obligated to administer the National Advertising Fund to make expenditures for Franchisee that are equivalent or proportionate to Franchisee's contribution or to ensure that any particular franchise benefits directly or pro-rata from the placement of advertising.
3. The National Advertising Fund, all contributions thereto, and any earnings thereon shall be used exclusively to meet any and all costs of maintaining, administering, researching, directing, and preparing advertising and/or promotional activities, including, without limitation, the costs of preparing and conducting advertising campaigns in various media; direct mail and outdoor billboard advertising; marketing surveys and other public relations activities; employing advertising agencies to assist therein; product development; and developing and providing promotional and other marketing materials for franchisees in the System.
4. Franchisor shall, for each of its company-owned locations (if any), make contributions to the National Advertising Fund on the same basis as assessments required of comparable franchisees within the System.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, franchisees are required to contribute to the National Advertising Fund. Specifically, franchisees must contribute 2% of their gross revenues, payable monthly. These contributions are directed to a national advertising fund established by Punch King Fitness for system-wide advertising initiatives.
The purpose of the National Advertising Fund is to enhance public recognition and acceptance of the Punch King Fitness brand for the benefit of all franchisees. Punch King Fitness retains sole discretion over the advertising's concepts, materials, media, and content. The document clarifies that Punch King Fitness is not obligated to ensure that advertising expenditures are directly proportionate to an individual franchisee's contribution, nor is it required to guarantee that each franchise benefits directly or pro-rata from advertising placements.
The funds collected are to be used exclusively for maintaining, administering, researching, directing, and preparing advertising and promotional activities. This includes covering costs related to advertising campaigns across various media, direct mail, outdoor advertising, marketing surveys, public relations, employing advertising agencies, product development, and providing promotional materials. Punch King Fitness also contributes to the National Advertising Fund for its company-owned locations on the same basis as franchisees.