How do franchisees advertise

The regional advertising iIn contrast, it is regularly regulated in the franchise contract as the task of the franchisee. However, these measures also regularly require the franchisor's prior consent, since the marketing and advertising concepts on which all advertising measures are based are regularly created, maintained or improved by the franchisor in order to ensure that all operations of the franchisee System appear uniformly to the outside world within a defined framework.

Therefore it is also incumbent upon Provision of advertising samples or means for individual advertising campaigns on site the franchisor. For the specific regional implementation, there is regularly scope for the individual franchisees in order to do justice to special local conditions.
In practice, these are often coordinated at short notice between the franchisor and the individual franchisees. Basically, however, there are initially regulations in franchise contracts, according to which all advertising requirements of the franchisor must first be complied with.

With many franchise systems it is necessary to develop marketing concepts and to carry them out on a national level Advertising an advertising or marketing pool of the franchisees provided, which is fed from the financial resources of the franchisees. For reasons of transparency and the clear separation of franchise fees, franchisors are regularly recommended to set separate advertising fees (e.g. one percent of the reported monthly net sales).

The ones from these Advertising fees Marketing measures financed by the franchisee must directly benefit the franchisees and must not be used to recruit new franchisees, as the franchisor is obliged to administer these funds in trust.

However, the franchisor regularly has a margin of discretion when using it, unless otherwise express regulations have been agreed. Whether and what restrictions the franchisor is subject to when carrying out advertising campaigns is a matter of dispute in the franchise literature. Advertising measures that violate legal regulations or good morals (ยง138 BGB) represent a violation of secondary obligations of the franchisor. Whether this also results in claims for damages by the franchisees concerned must be checked in each individual case. The Federal Court of Justice has in any case exercised great restraint in this context with regard to claims for damages asserted by authorized dealers or dealers.

In any case, in the case of problematic advertising measures, the franchisee should inform the franchisor of the negative consequences of image-damaging measures (e.g. shock advertising as carried out by Benetton in the early 1990s) and request the franchisor to issue a warning To discontinue advertising. Such a warning can under certain circumstances be a prerequisite for asserting a claim for damages.

Further development of the franchise concept

Even if the franchise contract does not expressly regulate an obligation of the franchisor to further develop the franchise concept, this arises inherent in the contract also from the general duties of the franchisor.

The obligation to further develop the franchise concept is assigned to the business promotion obligation of the franchisor.
The further development of the franchise concept includes market and competition monitoring, the development of new products and services based on the competition and product development that have taken place, as well as the further development of existing property rights.

The costs of the further development of the system by the franchisor are covered by the ongoing franchise fees to be paid by the franchisees, so that the franchisor is generally not allowed to charge any further fees for the further development measures.

So far the question is unansweredwhether the franchisor is permanently obliged to add new franchisees and locations to the franchise system. According to the prevailing opinion, this is not the case, since the design and expansion of the franchise system is basically at the discretion of the franchisor.

To Increase in sales and the Profitability of the franchise system In practice, however, the efforts of the franchisor will regularly be aimed at gaining new franchisees for the franchise system and thus further expanding the franchise system as a whole.