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Article 16: Advertising

There are many possible arrangements for advertising in franchising. In many franchise systems the franchisee must pay, apart from the franchise fee, an advertising fee to the franchisor, who undertakes to spend this money for the purposes of advertising and publicity. There are other systems, where the franchisees pay advertising fees to a fund, to which the franchisor also contributes. In many cases it is not only the franchisor, but also representatives of the franchisees, who jointly discuss how to spend the money in the fund.

The following paragraphs provide a basic arrangement for advertising.

16.1 The Franchisor shall promote the Business by adequate advertising and promotional actions and keep the Franchisee informed of such actions and provide, where appropriate, the Franchisee with promotional material (brochure, poster, catalogues, etc.).

16.2 The Franchisee shall submit to the Franchisor for its prior approval all proposed marketing and promotional campaigns and materials, as specified in the Manual or otherwise.

²²16.3 The Franchisee shall spend at least ____ % of its quarterly Gross Sales (referred hereinafter as Minimum Advertising Expenditure) on local marketing and promotion of the Business.

²³ 16.4 The Franchisee shall be required to pay to the Franchisor ____ % of the Gross Sales each quarter to contribute to the Franchisor’s promotional activities in relation to the Business.

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