Are Carvel franchisees required to participate in an Advertising Fund or Advertising Cooperatives?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
anchises.
D. No Proportionate Benefit; No Right to Withhold Contribution. The advertising and promotions that we conduct are intended to maximize general public recognition and patronage of the System generally in the manner that we determine to be most effective. We are not obligated to ensure that the expenditures from the Ad Fund are proportionate or equivalent to your contributions or that the Franchised Business will benefit directly or pro rata or in any amount from the placement of advertising. You will spend and/or contribute all advertising contributions, including the Advertising Contribution, provided for in this Agreement without reduction regardless of your perceived benefit to the Franchised Business or the amount of contribution by other franchisees operating Businesses or the default of these advertising obligations by any other franchisees.
10.4 Advertising Cooperatives.
A. Participation. You will participate, if we require, in any local, regional, or national cooperative advertising group consisting of other Businesses (an "Advertising Cooperative") that we specify, when and if any of these groups are created. We will designate the particular Advertising Cooperative(s) in which you may be required to participate (which designations may be based on, without limitation, the particular Designated Market Area or the Area of Dominant Influence, as those terms are used in the advertising industry, where your Franchised Business is located). If we collect the entire Local Marketing Obligation, we will not require you to participate in an Advertising Cooperative. You will enter into any formal agreements with the other franchisees of the System and/or us, as the case may be, as is necessary or appropriate to accomplish the goals of this Section 10.4 and you must abide by the formal agreements and decisions that we authorize the Advertising Cooperative to make on advertising and marketing in the area covered by the Advertising Cooperative.
B. Payments. Your payments to any Advertising Cooperative will be determined by you and those other franchisees and/or us, as the case may be, who are participants in the Advertising Cooperative, as stated in the by-laws of that Advertising Cooperative or membership, dues, participation, or other payment agreements of the Advertising Cooperative. Amounts paid to an Advertising Cooperative will be credited against your Local Marketing Obligation as specified in Section 10.1.E. (Local Marketing Obligation). Any contributions that you make to an Advertising Cooperative shall be additional to your Advertising Contribution as specified in Section 3.2.B. (Advertising Contribution) and your Grand Opening Obligation as specified in Section 10.1.C. (Grand Opening Advertising). If you become delinquent in your dues or other payments to the Advertising Cooperative or fail to abide by any formal agreements or authorized decisions of the Advertising Cooperative, the delinquency or failure will be deemed a failure to participate in the Advertising Cooperative and a material breach of this Agreement.
C. Operations of Advertising Cooperative. We may require any Advertising Cooperatives to only use public relations firms and advertising agencies that are Approved Suppliers.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, franchisees may be required to participate in Advertising Cooperatives if Carvel requires it. These cooperatives consist of other Carvel businesses and are formed at the local, regional, or national level. Carvel will designate the specific Advertising Cooperative a franchisee must join, potentially based on the Designated Market Area or Area of Dominant Influence where the franchised business is located. However, if Carvel collects the entire Local Marketing Obligation from the franchisee, the franchisee will not be required to participate in an Advertising Cooperative.
Payments to the Advertising Cooperative are determined by the franchisee, other participating franchisees, and/or Carvel, as outlined in the cooperative's by-laws or membership agreements. These payments can be credited towards the franchisee's Local Marketing Obligation. However, contributions to the Advertising Cooperative are in addition to the Advertising Contribution and Grand Opening Obligation. Failure to make payments or abide by the Advertising Cooperative's agreements constitutes a material breach of the Franchise Agreement.
Carvel also has the right to require franchisees to pay all or a portion of their Local Marketing Obligation to Carvel. In turn, Carvel may use these funds to contribute to the Ad Fund, spend on advertising campaigns (national, regional, or local), contribute to the Advertising Cooperative in the franchisee's market, or spend on local advertising in the franchisee's market. If Carvel exercises this right and collects the entire Local Marketing Obligation, the franchisee is not required to spend a minimum amount on local advertising (excluding the Grand Opening Obligation), provide a local marketing plan, or participate in the Advertising Cooperative. Carvel is not obligated to ensure that the funds spent are proportionate to the franchisee's contributions or that the franchised business will directly benefit from the advertising.