Does Carvel reserve the right to allocate advertising expenditures to any regions it deems appropriate?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
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 reserve the right to use any media, create any programs, and allocate advertising and promotional expenditures to any regions or locales we deem appropriate. We will not spend the Ad Fund in a manner that (i) exclusively benefits our licensees that manufacture and sell Approved Products, if any, or (ii) is principally a solicitation for the sale of franchises. We have no obligation to make expenditures from the Ad Fund that are equivalent or proportionate to your contributions, ensure that you benefit directly or proportionately or in any amount from the placement of advertising, or ensure that any advertising impacts or penetrates your area.
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 retains the right to allocate advertising and promotional expenditures to regions or locales it deems appropriate. This means that Carvel has the authority to decide where and how advertising funds are spent, without necessarily ensuring that each franchisee benefits directly or proportionately from the advertising efforts. Carvel's advertising and promotions are intended to maximize public recognition and patronage of the Carvel system in a manner that Carvel determines to be most effective.
This discretion extends to the type of media used and the programs created. Carvel is not obligated to spend Ad Fund monies in a way that is equivalent or proportionate to a franchisee's contributions, nor is it required to ensure that advertising impacts or penetrates a franchisee's specific area. This could mean that a franchisee in one region might see more advertising support than a franchisee in another, depending on Carvel's strategic decisions.
Prospective franchisees should be aware that while they are required to contribute to the Ad Fund (typically 3% of Net Sales, but 2.5% for Cinnabon Co-Branded Shoppes in Other Locations, excluding Swirl Shoppes, and no contribution for Hosted Express Shoppes), Carvel has sole authority over how these funds are used. Franchisees are also obligated to participate in local marketing, spending at least 2% of their Net Sales on local market advertising (1% for Ice Cream Trucks or Co-Branded Shoppes), although Carvel can mandate that these local marketing funds be directed to the Ad Fund or spent on Carvel's behalf. Carvel also has the power to form, change, or dissolve the Carvel Franchise Advisory Council, which provides suggestions on advertising issues but does not have decision-making authority.
Carvel also details how the Ad Fund was spent in Fiscal Year 2024. 16% of the Ad Fund was spent on media placement, 35% on production and agency fees, 10% on guest response programs and menu innovation projects, 36% on brand and category marketing expenses, and 3% on administrative expenses. Carvel is not required to have an independent audit of the Ad Fund completed, but will provide an annual summary of the expenditures of the Ad Fund on reasonable request.