Franchisor says: "I've collected money from franchisees through an advertising fund, and I'd like to use some of that money to build business in certain regions of the country."
Franchisee says: "I am contributing money to an advertising fund, and I expect that fund to be used for advertising and marketing in direct proportion to the stores in my given area."
Solution: "It's important that franchisors look upon this fund not as a way to make money but as a way to promote the trademark," says Kushell, who recommends franchisors use at least 80 percent of the advertising fund for direct advertising and promotional purposes.
Kushell warns franchisors against pulling money out of the fund for reasons that benefit them but cheat franchisees out of the full value of their advertising dollar. "Once you start using that money to pay [staff] salaries or, worse, to reduce the expense of selling new franchises, that's going to cause a lot of acrimony," he cautions.
Kushell has also noticed conflict about the types of ads that are run. To avoid headaches, franchisors can encourage franchisees to submit ideas and input on the advertising process.