What is the total APO allocation for a Carls Jr. franchise in years 4 and beyond?

According to the 2025 Carls Jr. Franchise Disclosure Document, the total APO (Advertising Promotion Obligation) allocation for a franchise in its fourth year and beyond is 5.50%. This contribution is allocated to different advertising funds, including the HNAF (presumably a national advertising fund), a regional co-op, and LSM (Local Store Marketing) allocation.

This means that after the initial three years of operation, a Carls Jr. franchisee will be required to allocate 5.50% of their gross sales towards advertising and promotional activities. This is a notable expense that franchisees must factor into their financial projections. The funds are used to support various marketing efforts, from national campaigns to local store-level promotions, all aimed at driving brand awareness and customer traffic.

The APO allocation increases over the first three years of operation, starting at 2.50% in the first year, 3.50% in the second year, and 4.50% in the third year, before settling at 5.50% from year four onwards. This gradual increase may help franchisees manage their cash flow during the initial years when they are establishing their business. However, the long-term commitment to the 5.50% APO allocation is a significant ongoing cost.

It is important for prospective Carls Jr. franchisees to understand how these advertising funds are managed and what specific marketing activities they support. Franchisees should inquire about the strategies and plans for both the regional co-op and the LSM allocation to ensure that these funds are being used effectively to benefit their specific location. Additionally, franchisees should be aware that the APO allocation might be affected by participation in any development incentive programs.