How is the Local Advertising Requirement fee currently collected by Spray Net if paid to them?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
EXPLANTORY NOTES TO ITEM 6 CHART**
- Generally. Unless otherwise stated this Item, all fees noted in this Item 6 are uniformly imposed and are payable to us and are non-refundable. All fees due under the Franchise Agreement shall be collected by us through any method that we determine. All fees are currently collected via GoCardless. You must execute certain forms or take certain stepsthat authorize us to collect all fees by whatever method we determine. All fees in this Item 6 are subject to increase due to inflation as measured by the United States Consumer Price Index. We may integrate a payment processing feature into our Business
Management Software in the future. If we do, you will be required to use that for payment processing, and you will be responsible for all monthly terminal fees and payment processing fees.
- Gross Sales. "Gross Sales" shall include all revenue from the sale of all products and performance of services from the Franchised Business, whether in the form of cash, credit, barter or rebates, and regardless of collection in the case of credit, and income of every kind and nature related to the Franchised Business, including any consideration that Franchisee receives from third-party vendors/suppliers. "Gross Sales" from customers shall not include monies that are collected and submitted by Franchisee for transmittal to the appropriate taxing authority. In computing the Gross Sales, Franchisee shall be permitted to deduct the amount of cash refunds to, and coupons used by customers at the time the balance is fully paid to Franchisee, if such amounts have been included in Gross Sales of the Franchised Business. Your Minimum Gross Sales, which are based on the number of Designated Territories you purchase and the length of time your Franchised Business has been in operation, are below. Your Royalty Fee is subject to a minimum equal to 7% of the applicable Minimum Gross Sales below.
| | Minimum Gross Sales | | | | | |------------------------------|---------------------------|-----------------------------|-----------------------------|--|--| | Period(s) | 1 Designated Territory | 2 Designated Territories | 3 Designated Territories | | | | First Year of Operation | $300,000 | $350,000 | $375,000 | | | | Second Year of Operation | $431,250 | $475,000 | $575,000 | | | | Third Year of Operation | $506,250 | $600,000 | $725,000 | | | | Fourth Year of Operation | $531,563 | $700,000 | $800,000 | | | | Fifth Year of Operation | $558,141 | $735,000 | $860,000 | | | | Sixth | $586,048 | $771,750 | $924,500 | | | | Year of Operation | | | | | | | Seventh | $615,350 | $810,338 | $993,838 | | | | Year of Operation | | | | | | | Eighth | $646,118 | $850,854 | $1,068,375 | | | | Year of Operation | | | | | | | Ninth | $678,423 | $893,397 | $1,148,503 | | | | Year of Operation | | | | | | | Tenth | $712,345 | $938,067 | $1,234,641 | | | | Year of Operation | | | | | | 3. Marketing Expenses (Local Advertising Requirement, Digital Marketing Spend, Production Fee, and Brand Fund Contribution). You must spend a minimum annual amount on local advertising for your Franchised Business ("Local Advertising Requirement"). You are required to spend 75% of your Local Advertising Requirement on digital marketing ("Digital Marketing Spend" or "DMS") on a monthly basis. We are currently the only Approved Supplier for digital marketing, and we may either perform the digital marketing services or contract with another supplier to provide them. Whether we provide the digital marketing services or engage another supplier to provide them, you are required to pay us our then-current fee for managing such digital marketing services (the
"Production Fee"), which covers the administrative cost of placing the digital advertising and is subject to a cap or maximum amount. You must also pay us a Brand Fund Contribution each month. The Local Advertising Requirement, Digital Marketing Spend, Production Fee, and Brand Fund Contribution are reflected in the charts below, based on the number of Designated Territories you purchase.
Source: Item 6 — > **ITEM 6 OTHER FEES (FDD pages 15–29)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, all fees, including those related to the Local Advertising Requirement, are currently collected via GoCardless. Spray Net has the right to change the method of payment with a 30-day written notice to the franchisee. Franchisees must authorize Spray Net and GoCardless to automatically collect these fees.
The Local Advertising Requirement includes a minimum annual amount that franchisees must spend on local advertising for their franchised business. At least 75% of this requirement must be spent on digital marketing, termed the Digital Marketing Spend (DMS), on a monthly basis. Spray Net is currently the only Approved Supplier for digital marketing services, but they may contract with another supplier. Franchisees are also required to pay Spray Net a Production Fee, which covers the administrative cost of placing the digital advertising, subject to a maximum amount. Additionally, franchisees must pay a Brand Fund Contribution each month.
For example, during the first year of operation, a Spray Net franchisee's annual Local Advertising Requirement is $40,000, with $30,000 earmarked for Digital Marketing Spend. There is also an Annual Production Fee Cap and an Annual Brand Fund Contribution, both collected monthly. These amounts vary in subsequent years of operation. The Digital Marketing Spend is payable on the 1st of each month, as determined by Spray Net.
Spray Net may integrate a payment processing feature into their Business Management Software in the future, and franchisees would be required to use that for payment processing, bearing responsibility for all monthly terminal fees and payment processing fees. Franchisees should be aware of these potential changes and factor them into their financial planning.