For the Black Bear Diner national advertising fund, when are other advertising and promotional costs expensed?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
ovides additional information about the Companyowned and franchised restaurants operating as of December 25, 2024 and December 27, 2023:
| Cash flows from investing activities: | | | |---|---|---| | ( 168,891) | ( 296,015) | | | Purchases of property and equipment | | | | Net cash used in investing activities | ( 168,891) | ( 296,015) | The Company-owned restaurants are operated by Bear Tracks Holdings LLC (BTH), an entity under common control with the Company. The Company and BTH are owned by BBD Opco LLC (Parent). BBD Opco LLC is owned by BBD Intermediate Holdco, LLC (Intermediate) and for which Intermediate is ultimately owned by BBD Holdco LLC (Holdco).
The Company also operates a national advertising fund (NAF) which administers national, regional, and local advertising and marketing initiatives for the brand. The Company receives funds from Black Bear Diner branded restaurants approximating 1.00% of revenue. The Company physically segregates these funds to ensure that the funds are utilized specifically for advertising and other brand
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, the timing of expensing advertising and promotional costs depends on the type of cost. Specifically, the production costs of advertising for the Black Bear Diner are expensed when the advertisements are first aired or displayed.
However, all other advertising and promotional costs associated with the national advertising fund (NAF) are expensed in the period they are incurred. This means that costs beyond the initial production of the advertisement, such as ongoing promotional activities or other marketing-related expenses, are recognized as expenses during the accounting period in which they take place.
For a prospective franchisee, this means that the 1% of revenue contributed to the NAF will be used for advertising and brand development initiatives. The production costs are expensed when the advertisements are first aired or displayed, while other advertising and promotional costs are expensed when incurred. This accounting practice provides transparency in how the advertising funds are being utilized and ensures that expenses are matched with the periods in which the related benefits are realized.