Is Carvel required to maintain the Ad Fund in a separate account?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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, Carvel is not currently required to maintain the Ad Fund in a separate account. The Ad Fund is used for advertising and promoting Carvel Shoppes, Proprietary Marks, and the System. Franchisees are required to contribute 3% of Net Sales to the Ad Fund, except for Cinnabon Co-Branded Shoppes in Other Locations (excluding Swirl Shoppes) where the contribution is 2.5% of Net Sales, and Hosted Express Shoppes which have no contribution requirement.
Carvel has sole authority over the Ad Fund, including advertising programs, promotions, creative concepts, and media usage. The document specifies that Carvel can use any media, create any programs, and allocate advertising expenditures to any regions they deem appropriate.
This arrangement means that Carvel has considerable discretion in managing and spending the Ad Fund. While Carvel provides an annual summary of Ad Fund expenditures upon request, it is not required to have an independent audit of the Ad Fund completed. Prospective franchisees should be aware that the Ad Fund monies are not required to be kept separate from Carvel's other funds, potentially impacting transparency and oversight.