Can All Team use the Advertising Fund to cover general operating expenses?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
No part of the Advertising Fund will be used by us to defray any of our general operating expenses other than those reasonably allocable to such advertising, which includes but is not limited to the cost of maintaining, administering, directing, placing and preparing national advertising materials, programs and public relations activities, the cost of employing advertising agencies and public relations firms to assist therewith, research and development and reasonable salaries, expenses, administrative costs and overhead as we incur in activities reasonably related to the administration or direction of the Advertising Fund and its advertising programs.
The Advertising Fund is intended to maximize recognition of our brand and that we will not be obligated, in administering the Fund to make expenditures for you which are equivalent or proportional to your contribution, or to ensure that any particular franchisee benefits directly or pro rata from expenditures made by the Fund. All sums received for the Fund will be maintained in an account separate from our other monies and will be used only as so provided. We will maintain separate bookkeeping accounts for the Fund and will provide an unaudited financial statement of the account if you so request in writing. If we do not use all of the funds in a particular fiscal year, the remaining funds will be carried over to the next fiscal year and be included in that year's advertising budget.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 18–23)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, All Team can use the Advertising Fund to cover general operating expenses that are reasonably allocable to advertising. This includes the costs of maintaining, administering, directing, placing, and preparing national advertising materials, programs, and public relations activities. It also covers the cost of employing advertising agencies and public relations firms, research and development, and reasonable salaries, expenses, administrative costs, and overhead incurred in activities related to the administration or direction of the Advertising Fund and its advertising programs.
This means that while All Team can use the Advertising Fund for some of its operating expenses, those expenses must be directly related to advertising activities. This is a common practice in franchising, where advertising funds are often used to cover the costs of marketing and promoting the brand. The FDD specifies that the funds will be maintained in a separate account and used only as provided, and All Team will provide an unaudited financial statement of the account if requested in writing.
For a prospective franchisee, this is important because it clarifies how the advertising fees they contribute will be used. It also provides some assurance that the funds will be used for their intended purpose, which is to maximize brand recognition. The franchisee also has the right to request an unaudited financial statement of the advertising fund, which provides a degree of transparency. If All Team does not use all of the funds in a particular fiscal year, the remaining funds will be carried over to the next fiscal year and be included in that year's advertising budget.