How are the national advertising funds (NAF) funded for 360 Painting?
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
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting's national advertising funds (NAF) are funded by contributions from franchisees. The revenue generated from these franchisee contributions is recognized as franchise service fees within the company's consolidated statement of operations. These funds are specifically used to cover the costs associated with preparing and producing various advertising and marketing materials designed for the benefit of the franchisees.
The funds collected are used to pay for the creation and production of advertising and marketing materials for franchisees. In 2023, NAF advertising expenses totaled $991,224, while in 2022, they amounted to $1,143,726. These expenses are recognized as they are incurred and are categorized under franchise support expenses in the consolidated statements of operations.
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 were $559,056 in 2023 and $461,056 in 2022. This indicates that 360 Painting utilizes multiple streams of advertising funding, with the NAF being directly supported by franchisee contributions and used for franchisee-specific advertising initiatives.