How can a Burger King franchisee access the audited financial statements for the Advertising Fund?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
As noted in Items 6 and 9 to this disclosure document, you must make advertising contributions to us. (Franchise Agmt. - Sec. 9) We maintain an advertising fund ("Fund") that includes Franchisee contributions and contribution by us as well as funds from certain suppliers (as described in Item 8 to this disclosure document). The rates of contribution to the Fund vary among Franchisees, and we may periodically offer programs to our Franchisees that will provide them benefits that offset their obligation to the Fund. Although not required to do so, our company-owned restaurants will contribute to the Fund as we require of you, except that if for any reason we provide payments to third party lenders who lend to our Franchisees, these restaurants may reduce their contributions to the Fund by the amount of these payments. Also, due to our predecessor's participation in programs offered to our Franchisees, it has reduced its voluntary contributions to the Fund to the same extent as would be permitted by Franchisees, and future contributions by our company-owned restaurants are likely to be similarly reduced. Various suppliers may also contribute to the Fund in consideration of purchases by Franchisees and us. Any advertising funds in the Fund not spent in the fiscal year in which they accrue are carried forward to the next year. We administer the Fund and arrange for an annual audit. These audited financial statements for the Fund are prepared annually and are available to Franchisees upon request.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 62–71)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, Burger King maintains an advertising fund that includes franchisee contributions, contributions from Burger King, and funds from certain suppliers. Burger King administers this fund and arranges for an annual audit. The audited financial statements for the fund are prepared annually and are available to Burger King franchisees upon request. This means that a prospective franchisee can request and review these statements to understand how the advertising funds are being managed and spent. This transparency helps franchisees stay informed about the financial aspects of the advertising programs that they contribute to.
This process is fairly standard in the franchise industry, where advertising funds are common. Franchisees typically contribute a percentage of their gross sales to a central fund managed by the franchisor. The availability of audited financial statements provides a level of accountability, ensuring that the funds are used appropriately for advertising and promotional activities. Franchisees can use this information to assess the effectiveness of the advertising programs and to ensure that Burger King is meeting its obligations regarding the use of these funds.
It is important for prospective Burger King franchisees to review these audited statements carefully. They should look for trends in spending, the allocation of funds across different advertising channels (e.g., television, digital, print), and any significant changes in the fund's financial performance. This review can help franchisees make informed decisions about their investment and participation in the Burger King system.