Into what kind of account are the Carbones Pizzeria advertising funds collected and maintained?

According to the 2025 Carbones Pizzeria Franchise Disclosure Document, the advertising fees, which are 1% of monthly Gross Sales up to $2,000,000, are collected and maintained in a separate bank account from the general operating funds of the company. There is no advertising fee on Gross Sales over $2,000,000 in any given year. The company-owned Carbones Pizzeria restaurant also contributes 1% of its sales to the advertising fund. However, there is one franchisee who does not pay an advertising fee and one whose threshold to cease payments is less than $2,000,000.

This arrangement ensures that the advertising funds are segregated from the franchisor's day-to-day operational finances. This separation provides a degree of transparency and accountability, as the funds are specifically earmarked for marketing and advertising activities intended to benefit the Carbones Pizzeria brand. The FDD specifies that any interest earned by the advertising funds will be used for advertising purposes before any principal is used.

Carbones Pizzeria retains significant control over how the advertising funds are spent. The FDD states that the franchisor may use the monies in the fund for any purpose that promotes the franchise system and its trademarks. These activities include creating and placing consumer advertising across various media, purchasing marketing-related technology, conducting market research, and covering administrative costs associated with the fund. While the FDD mentions that Carbones Pizzeria does solicit input from franchisees regarding advertising methods and expenditures, the final decisions on how the funds are allocated rest with the franchisor.

Although Carbones Pizzeria does not audit the advertising fund, the FDD indicates that an annual accounting will be made available to franchisees upon request, detailing how the fund's proceeds were spent in the previous year. This provides franchisees with an opportunity to review the fund's expenditures and assess whether the funds are being used effectively to promote the Carbones Pizzeria brand. Franchisees should carefully review this accounting and ask questions about any expenditures that seem unclear or inconsistent with the stated purpose of the fund.