How are advertising contributions from Burger King company restaurants treated in the consolidated advertising expense?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise PO because they are not dependent upon the franchise license or highly interrelated with the franchise license.
Supply Chain Cost of Sales
Cost of sales consists primarily of costs associated with the management of our Tim Hortons supply chain, including cost of goods, direct labor, depreciation, bad debt expense (recoveries) from supply chain sales and cost of products sold to retailers.
Company Restaurant Expenses
Company restaurant expenses include food, beverage and packaging costs, restaurant wages and related expenses and restaurant occupancy and other expenses.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, both company-owned and franchised restaurants contribute to advertising funds managed by Burger King's subsidiaries in the United States, Canada, and certain other international markets. These advertising funds are used to cover the production costs of advertisements when they are initially aired or displayed. All other advertising and promotional costs are expensed during the period they are incurred.
However, the advertising contributions made by Burger King's company-owned restaurants are eliminated during the consolidation process. This means that when Burger King prepares its overall financial statements, the contributions from its own restaurants are not included in the total advertising expense.
The consolidated advertising expense, which reflects the total advertising expenditure after eliminating contributions from company restaurants, amounted to $1,268 million in 2024, $1,201 million in 2023, and $1,032 million in 2022. This provides a view of Burger King's total advertising spend, primarily funded by franchisee contributions, without including internal contributions from company-owned locations.