Can the Carvel Ad Fund be used for public relations activities?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
We may use the Ad Fund to meet the costs of administering, preparing, and conducting national, local, or regional advertising, promotional, or brand building programs of any kind, including the cost of (i) preparing and conducting television, radio, magazine, newspaper, and digital advertising campaigns and other public relations activities (including, but not limited to, for purposes of brand reputation management), (ii) employing public relations firms and advertising agencies to assist in these activities, and (iii) conducting other activities that are directly or indirectly designed to promote the System, its franchisees, and/or increase System sales, such as limited-time menu offerings, crew incentives, franchisee incentive and/or promotional programs, customized materials (e.g., cups), up-sell programs, guest response programs, manager/employee recognition programs, quality assurance and food safety programs, mystery shop and shopper programs, brand websites and ordering platforms, brand applications, social media account administration and promotion, and in-shoppe equipment and technologies related to such marketing programs. We may use the Ad Fund to compensate us for the reasonable administrative costs and overhead we incur in activities related to advertising and promotional programs, including new product development; market research; preparing advertising and promotional materials; Digital Marketing (as defined below); working with public relations firms, advertising agencies, advertising placement services, and creative talent; reimbursing franchisee advisory council meeting expenses; developing and maintaining, and paying third parties for the development and maintenance of, internet sites, applications, and other equipment and technologies related to marketing programs.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 59–74)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the Ad Fund can be used for public relations activities. Carvel may use the Ad Fund to cover the costs of administering, preparing, and conducting advertising, promotional, or brand-building programs, including public relations activities for brand reputation management. This includes employing public relations firms and advertising agencies.
For a prospective Carvel franchisee, this means that a portion of the mandatory advertising contributions, which is currently 3% of Net Sales (or 2.5% for Cinnabon Co-Branded Shoppes in Other Locations, excluding Swirl Shoppes, and 0% for Hosted Express Shoppes), may be allocated to public relations efforts managed by Carvel. These efforts are intended to promote the Carvel system and increase sales.
In fiscal year 2024, Carvel allocated 35% of the Ad Fund to production and agency fees, which includes press relations. While franchisees contribute to the Ad Fund, Carvel retains sole authority over its use, including the selection of advertising programs, creative materials, and media placement. Carvel is not obligated to ensure that advertising expenditures directly benefit each franchisee proportionately or in any specific amount. The Carvel Franchise Advisory Council provides suggestions on advertising issues but does not have decision-making authority.