Can other Carvel franchisees have different Ad Fund contribution requirements?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
Ad Fund. We will allocate your Advertising Contributions to a fund for the advertising and promotion of the Shoppes, the Proprietary Marks, and the System (the "Ad Fund"). Currently, you must make Advertising Contributions to the Ad Fund in the amount of 3% of Net Sales, except if you operate a Cinnabon Co-Branded Shoppe in Other Locations (excluding Swirl Shoppes) the contribution is 2.5% of Net Sales and if you operate a Hosted Express Shoppe no contribution is required. We may increase the Advertising Contribution by notice to franchisees. However, your required Advertising Contribution and Local Marketing Obligation will collectively not exceed 5% of your Net Sales. Your Advertising Contribution is in addition to your Local Marketing Obligation and your Grand Opening Obligation (as defined below).
We currently do not, and are not required to, maintain the Ad Fund, Advertising Contribution you paid, or income earned from contributions to the Ad Fund in a separate account from our other money. Our Shoppes will contribute to the Ad Fund in the same manner and in the same amounts as similarly-situated franchised Shoppes. Our other franchisees may not be required to contribute to the Ad Fund, may be required to contribute to the Ad Fund at a different rate than you, or may be required to contribute to a different advertising fund.
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 contribution requirements can vary among franchisees. The standard contribution is 3% of Net Sales, but this differs for specific Carvel shop types. For Cinnabon Co-Branded Shoppes in Other Locations (excluding Swirl Shoppes), the contribution is 2.5% of Net Sales. Hosted Express Shoppes are not required to contribute to the Ad Fund at all.
This means that a prospective Carvel franchisee's financial obligations towards the Ad Fund can differ significantly based on the type of Carvel shop they operate. It is important to note that Carvel retains the right to increase the Advertising Contribution with notice to franchisees, but the combined Advertising Contribution and Local Marketing Obligation will not exceed 5% of Net Sales.
Carvel also states that other franchisees may not be required to contribute to the Ad Fund, may be required to contribute at a different rate, or may be required to contribute to a different advertising fund. This indicates that Carvel has the flexibility to adjust advertising contribution requirements based on various factors, which could include market conditions, franchise agreement terms, or other strategic considerations. A prospective franchisee should clarify the specific Ad Fund contribution requirements applicable to their particular franchise agreement and shop type to fully understand their financial obligations.