Does Carvel specify if the Ad Fund is audited?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
We are not required to have an independent audit of the Ad Fund completed. We will provide you with an annual summary of the expenditures of the Ad Fund on your reasonable request but are not required to prepare financial statements for the Ad Fund. If any monies in the Ad Fund remain at the end of a fiscal year, they will carry-over in the Ad Fund into the next fiscal year. Any amounts that we or our affiliates contribute to the Ad Fund in excess of the required Advertising Contribution
for Shoppes that we or they operate and any spending on advertising that we or they make in excess of the amounts then available in the Ad Fund will be considered an advance from us or our affiliates to the Ad Fund. We and/or our affiliates have the right to be reimbursed from the Ad Fund any amounts that are advanced to the Ad Fund.
We intend for the Ad Fund to be perpetual; however, after all of the Ad Fund contributions have been spent for the purposes described above, we may terminate the Ad 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 required to have an independent audit of its Ad Fund completed. However, Carvel will provide franchisees with an annual summary of the Ad Fund's expenditures upon reasonable request, but is not required to prepare financial statements for the Ad Fund. Any remaining monies in the Ad Fund at the end of a fiscal year will carry over into the next fiscal year.
Carvel or its affiliates may contribute to the Ad Fund beyond the required advertising contribution for company-operated Shoppes, and any excess spending on advertising will be considered an advance to the Ad Fund. Carvel and its affiliates have the right to be reimbursed for these advanced amounts from the Ad Fund. Carvel intends for the Ad Fund to be perpetual but may terminate it after all contributions have been spent for the described purposes.
This lack of a mandatory independent audit means prospective Carvel franchisees must rely on the annual summary provided by Carvel to understand how the Ad Fund is being managed. While an annual summary offers some transparency, it does not provide the same level of assurance as a full audit conducted by an independent accounting firm. Franchisees may want to inquire further about the level of detail included in the annual summary and the processes Carvel uses to ensure the accuracy of the reported expenditures.