Under what condition can Carvel change the Local Marketing Obligation?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
If we require you to spend a minimum amount on local market advertising, we will
specify the minimum amount in Schedule A (the "Local Marketing Obligation") and, upon our request, require you to submit for our written approval an annual local marketing plan. We may change the Local Marketing Obligation, provided that we must give you at least 60 days' written notice of the change. Your Local Marketing Obligation will be in addition to amounts you must pay or spend under Section 3.2.B (Advertising Contribution) and for the Grand Opening Obligation under Section 10.1.C. (Grand Opening Advertising). You will be responsible for determining the amount of advertising funds you spend for individual local market advertising, subject to the Local Marketing Obligation (if any) and our approval of your annual local marketing plan, if applicable.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel can change the Local Marketing Obligation, provided they give the franchisee at least 60 days' written notice of the change. The Local Marketing Obligation is in addition to amounts the franchisee must pay or spend under Section 3.2.B (Advertising Contribution) and for the Grand Opening Obligation under Section 10.1.C. (Grand Opening Advertising). The franchisee is responsible for determining the amount of advertising funds spent for individual local market advertising, subject to the Local Marketing Obligation (if any) and Carvel's approval of the franchisee's annual local marketing plan, if applicable.
This means that Carvel franchisees need to be aware that their local marketing spending requirements could change during the term of their franchise agreement. The 60-day notice period provides some buffer, but franchisees should still factor in the potential for increased marketing costs when budgeting. It is also important to note that this local marketing obligation is separate from other advertising fees and grand opening expenses.
Prospective franchisees should carefully review Schedule A of the Franchise Agreement, as it specifies the initial Local Marketing Obligation. They should also inquire about Carvel's historical practices regarding changes to the Local Marketing Obligation and the factors that might trigger such changes. Understanding these aspects can help franchisees better prepare for potential fluctuations in their marketing expenses.