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Do Franchisees Really Benefit from the Advertising Fund?

 

A common fee imposed by the franchisor is a weekly or monthly contribution to a National Advertising Fund.  Often times, the franchisor will have sole control of this advertising fund and will determine the creative concepts, materials and endorsements used as well as the geographic, market, media placement and allocation of the advertisements.  At first glance, you may think “This is great! The franchisor will be doing the advertising for me so I won’t have to worry about it.”

However, this is not necessarily how it works and many franchisees get stuck paying into an advertising fund that does nothing to actually support and promote their franchise.  This is why it is very important to ask the franchisor exactly how the money from the advertising fund is spent and what kind of advertising you can expect from the franchisor in your geographic area.  Based on the answers the franchisor provides to these questions, you may decide that the franchisor will not be providing as much advertising as you would like and so you will want to invest in local advertising to promote your franchise.  But some franchisors have restrictions on your ability to do this so be sure to consult the franchise agreement regarding any local advertising requirements and any approval process advertisements have to go through with the franchisor before you can publish them.  If the franchisor has restrictions on your ability to advertise locally, you will need to consider how it will affect your bottom line and whether it is something that you are really okay with before deciding to purchase the franchise.