Does Carvel specify any restrictions on how the Ad Fund can be used?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
We may use the Ad Fund to meet the costs of administering, preparing, and conducting national, local, or regional advertising, promotional, or brand building programs of any kind, including the cost of (i) preparing and conducting television, radio, magazine, newspaper, and digital advertising campaigns and other public relations activities (including, but not limited to, for purposes of brand reputation management), (ii) employing public relations firms and advertising agencies to assist in these activities, and (iii) conducting other activities that are directly or indirectly designed to promote the System, its franchisees, and/or increase System sales, such as limited-time menu offerings, crew incentives, franchisee incentive and/or promotional programs, customized materials (e.g., cups), up-sell programs, guest response programs, manager/employee recognition programs, quality assurance and food safety programs, mystery shop and shopper programs, brand websites and ordering platforms, brand applications, social media account administration and promotion, and in-shoppe equipment and technologies related to such marketing programs. We may use the Ad Fund to compensate us for the reasonable administrative costs and overhead we incur in activities related to advertising and promotional programs, including new product development; market research; preparing advertising and promotional materials; Digital Marketing (as defined below); working with public relations firms, advertising agencies, advertising placement services, and creative talent; reimbursing franchisee advisory council meeting expenses; developing and maintaining, and paying third parties for the development and maintenance of, internet sites, applications, and other equipment and technologies related to marketing programs.
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 has the sole authority to direct all advertising programs and promotions and uses of the Ad Fund. Carvel also maintains sole control over the creative concepts, materials, and media used in the programs, and the placement and allocation of advertising. Carvel reserves the right to use any media, create any programs, and allocate advertising and promotional expenditures to any regions or locales they deem appropriate.
Carvel specifies that it will not spend the Ad Fund in a manner that exclusively benefits its licensees that manufacture and sell Approved Products, if any, or is principally a solicitation for the sale of franchises. Carvel is under no obligation to make expenditures from the Ad Fund that are equivalent or proportionate to a franchisee's contributions, ensure that a franchisee benefits directly or proportionately or in any amount from the placement of advertising, or ensure that any advertising impacts or penetrates a franchisee's area.
In fiscal year 2024, Carvel allocated the Ad Fund as follows: 16% 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 intends for the Ad Fund to be perpetual; however, after all of the Ad Fund contributions have been spent for the purposes described above, Carvel may terminate the Ad Fund.
Carvel does not have an advertising council composed of franchisees that is involved in decision-making on advertising issues, but the Carvel Franchise Advisory Council provides suggestions on advertising issues. The FAC is advisory only and does not have decision-making authority. At a minimum, a majority of the members of the FAC are franchisees in good standing who are nominated and elected by other franchisees, and the remainder of the members are franchisees or other representatives who may be appointed by Carvel. Carvel has the power to form, change, or dissolve the FAC or any other advertising or advisory council at any time.