How are the national advertising funds (NAF) for 360 Painting funded?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
her evidence indicates that it is more likely than not that a position will be sustained if examined by a taxing authority. The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority. There were no amounts recorded as of December 31, 2023 or 2022 related to uncertain tax positions.
Advertising Costs
The Company administers national advertising funds (NAF) which are funded by the franchisees for which the associated revenue is recognized in franchise service fees on the consolidated statement of operations. The NAF pays for costs of preparing and producing various advertising and marketing materials for the franchisees. The NAF advertising expenses are recognized as incurred and are included in franchise support expenses on the consolidated statements of operations. NAF advertising expen
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the national advertising funds (NAF) are funded by franchisees. The revenue associated with these funds is recognized as franchise service fees on the consolidated statement of operations. These funds are used to cover the costs of preparing and producing various advertising and marketing materials for the franchisees.
The NAF advertising expenses are recognized as they are incurred and are included in franchise support expenses on the consolidated statements of operations. For the years ending December 31, 2023, and 2022, the NAF advertising expenses totaled $991,224 and $1,143,726, respectively.
In addition to the NAF, 360 Painting also incurs non-NAF advertising expenses, which are recognized as incurred and included in franchise sales expenses on the consolidated statements of operations. These non-NAF advertising expenses amounted to $559,056 in 2023 and $461,056 in 2022. This means that franchisees contribute to a central fund that supports advertising efforts, and the franchisor also spends additional amounts on advertising that are not derived from the franchisee contributions.