Does Churchs Chicken maintain an Advertising Fund, and if so, what is its purpose?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's franchise agreements for all restaurants owned by the Parent, the Company, domestic franchisees, and certain international franchisees, including all franchisees in Puerto Rico, require participation and contributions of a percentage of their gross sales to an advertising fund administered by Church's Chicken Advertising Fund (the Fund).
Under the Franchise Agreement, we must use the Ad Fund for advertising, marketing, and public relations programs and related activities, and (except as stated in the Franchise Agreement) we cannot use the Ad Fund for our general operating expenses.
All franchisees must contribute to our Ad Fund. You must contribute to the Ad Fund each week 5% of your Restaurant's Gross Sales. However, we may require you to contribute a minimum of $25,000 per year to the Ad Fund. If we create an Ad Co-op and require your participation, you must still contribute 5% of your Restaurant's weekly Gross Sales to the Ad Fund. All franchisees contribute to the Ad Fund on the same basis (except that some older Franchise Agreements may provide for different contribution rates and certain franchisees in captive locations (e.g., food courts) may have a negotiated lower Ad Fund contribution rate).
We administer the Ad Fund and have the right to direct all spending by the Ad Fund.
We do not audit the Ad Fund on an annual basis. We do prepare an annual statement of monies collected and costs incurred by the Ad Fund and can provide it to you on written request.
In fiscal year 2024, 16% of the Ad Fund was spent on production; 56% was spent on media placement; 6% was spent on point-of-purchase items; 2% was spent on research and development; 1% was spent on public relations and promotions; 4% was spent on digital technology; and 15% was spent on administration and one time strategic initiatives/research (e.g., core consumer research).
Under the Franchise Agreement, we may create Regional Advertising Cooperatives ("Ad Co-ops") and require your participation in them.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 35–43)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the company maintains an Advertising Fund (Ad Fund) to increase public awareness of Churchs Chicken restaurants and the system. Franchisees are required to participate and contribute a percentage of their gross sales to this fund, which is administered by Church's Chicken Advertising Fund. Specifically, franchisees must contribute 5% of their restaurant's gross sales each week to the Ad Fund; however, Churchs Chicken may require a minimum contribution of $25,000 per year.
The Ad Fund is used exclusively to cover the costs of market research, advertising, and promotional activities. Churchs Chicken controls the Ad Fund and directs all spending. While the company does not audit the Ad Fund annually, it prepares an annual statement of monies collected and costs incurred, which is available to franchisees upon written request.
In 2024, the Ad Fund's expenditures were allocated as follows: 16% on production, 56% on media placement, 6% on point-of-purchase items, 2% on research and development, 1% on public relations and promotions, 4% on digital technology, and 15% on administration and strategic initiatives. Churchs Chicken may also create Regional Advertising Cooperatives (Ad Co-ops) and require franchisee participation. The company is not obligated to spend any specific amount on advertising in any individual franchisee's designated market area or territory.