Under what conditions can Carls reallocate or increase a franchisee's advertising contributions, and what is the maximum increase allowed within a 12-month period?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
(3) We have the right, following written notice to you, to reallocate your advertising contributions and to increase your advertising contributions, but not by more than ½% of Gross Sales in any 12 month period, up to 7.0% of Gross Sales. In addition, we may, in our sole discretion, temporarily or permanently adjust the advertising contribution for certain locations or markets due to unique or unusual circumstances.
Source: Item 6 — Other Fees (FDD pages 26–31)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, Carls has the right to reallocate a franchisee's advertising contributions. Carls also has the right to increase these contributions, but with limitations. Carls must provide written notice to the franchisee before reallocating or increasing advertising contributions.
The increase in advertising contributions is capped at one-half of one percent (0.5%) of Gross Sales within any 12-month period. The total advertising contributions cannot exceed 7.0% of Gross Sales.
Carls also retains the discretion to temporarily or permanently adjust the advertising contribution for specific locations or markets if unique or unusual circumstances arise. This allows Carls to respond to changing market conditions or specific challenges faced by individual franchise locations.