What is the APO allocation for a Carls Jr. franchise for years 4 and beyond?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
| APO Allocation by Period | Total APO | HNAF | Regional Co-op | LSM Allocation |
|---|---|---|---|---|
| Year 1: First 12 months | 2.50% | |||
| Year 2: Second 12 months | 3.50% | |||
| Year 3: Third 12 months | 4.50% | |||
| Years 4 and beyond | 5.50% |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the APO (Advertising Pool Obligation) allocation for a franchise changes over time. For the first three years of operation, the APO allocation increases annually. However, starting in year four and continuing for the remainder of the franchise agreement, the APO allocation stabilizes.
Specifically, the Carls Jr. franchise agreement stipulates that for years 4 and beyond, the APO allocation is set at 5.50% of gross sales. This means that a franchisee must contribute 5.50% of their restaurant's gross revenue to the advertising pool, which is used for marketing and promotional activities to benefit the entire Carls Jr. system.
It's important to note that the FDD also mentions that the APO allocation is dependent on whether the new franchised restaurant is located within a DMA (Designated Market Area) that has a regional co-op. However, the specific details of how the APO allocation might differ in those circumstances are not provided in this excerpt. A prospective franchisee should clarify with Carls Jr. how the existence of a regional co-op would affect their APO obligations.