What is the purpose of the Advertising Fund maintained by Churchs Chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Advertising and standardization of advertising and promotion is important to the goodwill and public image of the System. Our advertising program is conducted through a national fund ("Ad Fund") which is described below. We control the Ad Fund and administer it to support each designated market area ("DMA"). 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.
The Ad Fund currently uses all contributions made to it, and any earnings on those contributions exclusively to pay the costs of maintaining, administering, directing and preparing market research, advertising and/or promotional activities. We maintain all sums paid to the Ad Fund in an account separate from our other funds. We maintain separate bookkeeping accounts for the Ad Fund. We do not use the Ad Fund to defray our expenses except as permitted under the Franchise Agreement, and except for expenses we incur in administering the Ad Fund and in running advertising and marketing programs for the System. We may charge the Ad Fund for our reasonable costs for market research, production and distribution of advertising materials.
We anticipate that all contributions to, and earnings of, the Ad Fund will be spent during the year in which the contributions and earnings are received. If, however, there are excess amounts in the Ad Fund at the end of the year, the amounts are carried over to the following year. If a deficit exists in any year, we may use contributions in the next year to cover that deficit amount.
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.
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).
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 purpose of the Advertising Fund (Ad Fund) is to increase public awareness of Churchs Chicken restaurants and the overall system. The Ad Fund is administered by Churchs Chicken and is used for advertising, marketing, and public relations programs and related activities. Churchs Chicken states that it will not use the Ad Fund for its general operating expenses, except as outlined in the Franchise Agreement.
The Ad Fund uses contributions to cover the costs of maintaining, administering, directing, and preparing market research, advertising, and promotional activities. Churchs Chicken maintains the Ad Fund in a separate account and keeps separate bookkeeping records for it. While the company aims to spend all contributions and earnings within the year they are received, any excess amounts are carried over to the following year to cover potential deficits.
Franchisees are required to contribute to the Ad Fund, typically a percentage of their gross sales. For instance, franchisees must contribute 5% of their restaurant's gross sales each week to the Ad Fund, although Churchs Chicken may require a minimum annual contribution of $25,000. The funds are used for national, regional, and local media coverage, including television, radio, digital, social media, direct mail, and outdoor advertising. In 2024, the Ad Fund's expenditures included production (16%), media placement (56%), point-of-purchase items (6%), research and development (2%), public relations and promotions (1%), digital technology (4%), and administration and strategic initiatives (15%).