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Franchise Agreements, Advertising and Promotion Issues

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In the world of franchising it is imperative to have a cohesive marketing plan throughout all regions and all franchised outlets. Without a comprehensive and cohesive marketing plan, with each franchisee doing their own thing the overall message to the consumer can become so diluted that synergies which are of supreme benefit to franchise systems are lost. It behooves all members of a franchise company to support a main message and participate in all marketing, advertising and promotion.

To prevent these issues from hurting my franchise company, by established in the franchise agreements, as well as a confidential operations manual guidelines, which addressed advertising, marketing and promotional issues. By addressing this issue early on in the franchisees business, I was able to prevent problems later down the road and insure that each franchised outlet was on the same page. Below is the clause that I used in our franchise agreements;

3.16 Advertising and Promotion

3.16.1 Independent Advertising

Franchisee, at its own expense, must conduct local advertising and promotional activities as reasonably required to enhance the public awareness, goodwill and image of the Franchised Business. Franchisee may not use any advertising, sales or promotional materials of any kind or conduct any broadcast advertising or promotion, without first obtaining the written approval of Franchisor, which approval will not be withheld unreasonably. To obtain approval, Franchisee must submit a copy of the proposed advertising to Franchisor for review. If Franchisor does not give Franchisee written notice of disapproval within fifteen (15) business days after receipt of the proposed advertising, then such advertising will be deemed to be approved.

Notwithstanding the foregoing, Franchisor may from time to time, in its reasonable discretion, provide Franchisee with such marketing programs and brochures developed by Franchisor as Franchisor deems appropriate for use in the Marketing Area. Franchisee may use such of Franchisor's marketing materials in connection with Franchisee's local advertising in accordance with Franchsior's advertising standards and without Franchisor's prior approval unless Franchisor sends written notice to Franchisee that the use of such marketing material is thereafter prohibited. Except as permitted under Section 3.15 above, Franchisor's approval will not be required and Franchisor will not review any portion of the materials referenced in this Section 3.16, with respect to pricing or the other terms of sale of the Services to be provided by Franchisee.

Each franchisor should make sure they have a comprehensive strategy for marketing and promotion in that should include all advertising material in the should be read and reviewed on a routine basis. Additionally I would go one step further and suggest that a franchising company should indeed consult an experienced and knowledgeable franchise attorney on this issue to see if it makes sense to include such in their franchise agreements. Consider this in 2006.

Lance Winslow

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