How are National Advertising Funds (NAF) used by 360 Painting, and who funds them?
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 administered by the company and funded by franchisees. The funds are used to cover the costs of preparing and producing various advertising and marketing materials for the franchisees. These expenses are recognized as incurred and are included in franchise support expenses on the consolidated statement of operations.
The FDD provides specific figures for NAF advertising expenses for the years ending December 31, 2023, and 2022, which were $991,224 and $1,143,726, respectively. The franchisor also incurs non-NAF advertising expenses, which are recognized as incurred and included in franchise sales expenses. These non-NAF expenses amounted to $559,056 in 2023 and $461,056 in 2022.
In practical terms, this means that a portion of the fees paid by 360 Painting franchisees is pooled into a national advertising fund, which 360 Painting then uses to create marketing materials and advertising campaigns. While franchisees contribute to the NAF, 360 Painting retains control over how these funds are spent. Prospective franchisees should note the amounts spent on NAF versus non-NAF advertising to understand the scope of the national advertising efforts.