Is the Crab N Spice Marketing Fund audited?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
Advertising Fund. You and all other franchisees must contribute to our Marketing Fund. Your contribution is 1% of gross sales per week. We reserve the right to have other franchisees contribute a different amount or at a different rate. Outlets that we own are not obligated to contribute to the Marketing Fund. We administer the fund. The fund is not audited. We will make unaudited annual financial statements available to you upon request.
Because we are a new franchisor, we did not spend any money from the Marketing Fund in our most recently concluded fiscal year.
If less than all marketing funds are spent in the fiscal year in which they accrue, the money will remain in the Marketing Fund to be spent in the next year.
No money from the Marketing Fund is spent principally to solicit new franchise sales.
Market introduction plan. You must develop a market introduction plan and obtain our approval of the plan at least 30 days before the projected opening date of your business.
Required spending. After you open, you must spend at least 2% of gross sales each month on marketing your business.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 20–27)
What This Means (2024 FDD)
According to the 2024 Crab N Spice Franchise Disclosure Document, the Marketing Fund is not audited. All franchisees are required to contribute 1% of their gross sales per week to the Marketing Fund, though Crab N Spice retains the right to have different franchisees contribute different amounts or rates. Company-owned outlets are not obligated to contribute to the fund.
Crab N Spice will administer the fund and make unaudited annual financial statements available to franchisees upon request. Because Crab N Spice is a new franchisor, no money was spent from the Marketing Fund in the most recently concluded fiscal year. Any unspent funds will remain in the Marketing Fund for use in subsequent years.
Notably, the FDD specifies that no money from the Marketing Fund will be used to solicit new franchise sales. Franchisees are also required to spend at least 2% of gross sales each month on local marketing efforts. Prospective franchisees should consider the implications of contributing to a marketing fund that is not audited, and should request and carefully review the unaudited annual financial statements to ensure transparency and proper use of funds.