What is the weekly advertising and promotion obligation (APO) for a Carls franchisee, as detailed in the franchise agreement?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
During the term of this Agreement, Franchisee shall have a weekly advertising and promotion obligation ("APO") in the amount set forth in Section 6.C. and Appendix C. Following written notice to Franchisee, CJR may modify the amount and allocation of the APO subject to the provisions of Section 8.F. Franchisee shall pay, at the same time and in the same manner as the royalty fee, that portion of the APO as CJR may direct to the Production Fund in accordance with Section 8.B. The remainder of the APO shall be paid, at the same time and in the same manner as the royalty fee, to the Media Fund in accordance with Section 8.C.
CJR has established, and will maintain and administer a fund for the creation and development of advertising, marketing, social media and public relations, research and related programs, gift card and loyalty programs, activities and materials that CJR, in its sole discretion, deems appropriate ("Production Fund"). Franchisee shall contribute to the Production Fund the amount set forth in Appendix C, as subsequently modified pursuant to Section 8.F. Carl's Jr. Restaurants operated by CJR and its affiliates shall contribute to the Production Fund on the same basis as comparable franchisees.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls FDD, franchisees have a weekly advertising and promotion obligation (APO). The specific amount of this obligation is detailed in Section 6.C and Appendix C of the franchise agreement. Carls has the right to modify the amount and allocation of the APO with written notice to the franchisee, as per Section 8.F of the agreement.
The APO is divided into two parts: the Production Fund and the Media Fund. The portion directed to the Production Fund is used for creating and developing advertising, marketing, social media, public relations, research, gift card and loyalty programs, and related materials. The amount that franchisees must contribute to the Production Fund is specified in Appendix C and can be modified by Carls according to Section 8.F.
The remaining portion of the APO is allocated to the Media Fund. Both the Production Fund and the Media Fund contributions are paid at the same time and in the same manner as the royalty fee. Carls Jr. Restaurants operated by Carls and its affiliates contribute to the Production Fund on the same basis as comparable franchisees. Prospective franchisees should carefully review Section 6.C and Appendix C of the franchise agreement to understand the exact weekly APO amount and how it is allocated between the Production Fund and the Media Fund.