Does Carvel specify how franchisees are notified of changes to the Ad Fund contribution requirements?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
d to conduct any advertising or spend any amount on advertising in your market. We may periodically formulate, develop, produce, and conduct, at our sole discretion, advertising or promotional programs in such forms and media as we determine to be most effective. We may make available to you for you to purchase approved advertising and promotional materials, including signs, posters, collaterals, etc. that we have prepared.
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.
We or an affiliate will administer the Ad Fund. We have sole authority to direct all advertising programs and promotions and uses of the Ad Fund, with sole control over the creative concepts, materials, and media used in the programs, and the placement and allocation of advertising.
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 may increase the Advertising Contribution required from franchisees by providing notice to the franchisees. The document specifies that while Carvel can increase the Ad Fund contribution, the combined Advertising Contribution and Local Marketing Obligation will not exceed 5% of Net Sales. The Advertising Contribution is in addition to the Local Marketing Obligation and the Grand Opening Obligation.
Currently, franchisees must 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. Hosted Express Shoppes are not required to contribute. Carvel retains sole authority over advertising programs and promotions and has control over creative concepts, materials, media, and the allocation of advertising.
For Local Marketing Obligations, Carvel may change the obligation, but they must provide at least 60 days' written notice of the change. Currently, franchisees must spend at least 2% of Net Sales on local market advertising each calendar quarter (1% for Ice Cream Trucks or Co-Branded Shoppes). Carvel has the right to require franchisees to pay all or a portion of the Local Marketing Obligation to Carvel, which Carvel may then use for various advertising purposes. Carvel is not obligated to ensure that the Local Marketing Obligation monies spent are proportionate to the franchisee's contributions or that the Shoppe will benefit directly from the advertising.