Does Closet Storage Concepts or its affiliates have a contractual obligation to contribute to the NAP?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
All franchisees will be required to contribute on the same basis. Our suppliers may be asked to contribute to the NAP on terms we negotiate. Neither we nor our affiliates have a contractual obligation to contribute to the NAP. We have the sole right to determine contributions and expenditures from the NAP, or any other advertising program, and sole authority to determine the selection of the advertising materials and programs. We are not required, under the Franchise Agreement, to spend any amount of NAP contributions in your Territory and not all System franchisees will benefit directly or on a pro rata basis from these expenditures. (Section 3.5 of the Franchise Agreement). NAP contributions may be used at our discretion for the following: the development, production and distribution of national and/or local advertising; the creation of advertising materials and public relations which, in our sole judgment, promote the products and services offered by System businesses including development and production of advertising and marketing programs and materials; purchase of media, field marketing programs and activities; promotions, new product research and development, quality control, mystery shopper programs which may include call recording; market research; talent fees; working with public relations firms; website and social media development and maintenance; creating or maintaining a presence in virtual worlds, and for administrative, travel, debt service and operating costs and overhead.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–38)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, neither Closet Storage Concepts nor its affiliates have a contractual obligation to contribute to the National Advertising Program (NAP). While franchisees are required to contribute to the NAP, the franchisor retains the sole right to determine contributions and expenditures. This means Closet Storage Concepts has the authority to decide how much is contributed to the NAP and how those funds are spent.
This arrangement gives Closet Storage Concepts significant control over the NAP, including the selection of advertising materials and programs. The FDD specifies that Closet Storage Concepts is not required to spend any amount of NAP contributions in a franchisee's specific territory, and not all franchisees will directly benefit from these expenditures. The NAP contributions can be used for various purposes, including advertising development, media purchases, market research, website maintenance, and administrative costs.
Closet Storage Concepts also has the right to charge the NAP for costs and overhead incurred in creating and implementing the NAP and advertising programs. These costs can include preparing advertising campaigns, employing advertising agencies, and compensating employees involved in the NAP's administration. Franchisees should be aware that Closet Storage Concepts' decisions regarding the NAP are final and binding, which means franchisees have limited input on how the NAP funds are used.
Prospective franchisees should consider the implications of this structure, as it means they are required to contribute to a program over which they have little control. It is important to understand how Closet Storage Concepts has managed the NAP in the past and what their plans are for its future use. Franchisees should also inquire about the specific allocation of NAP funds and how they can expect to benefit from the program.