How does the Cooperative Advertising fee for Craters & Freighters (Item 6) relate to the franchisee's overall advertising obligations as potentially outlined in Item 9?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
We may designate any geographic area in which two or more Craters & Freighters outlets are located as a region for establishing a Cooperative. The members of the Cooperative for any area will consist of all Craters & Freighters outlets, whether franchised or operated by
us or our Affiliates. We will determine in advance how each Cooperative will be organized and governed and when it must commence operations. Accordingly, we do not currently have any governing documents available for review. Each Cooperative will be organized for the sole purposes of administering advertising programs and developing, subject to our approval, promotional materials for use by the members in local advertising. If a Cooperative has been established for a geographic area where your Craters & Freighters Franchised Business is located when the Franchise Agreement is signed, or if any Cooperative is established during the term of the Franchise Agreement, you must become a member of the Cooperative and abide by the rules of the Cooperative. Cooperatives will set their own fees, which cannot exceed one percent (1%) of Adjusted Gross Sales. Franchisor-owned outlets must contribute to the fund on the same basis as franchisees. Each Cooperative established must prepare annual statements which will be available for review by its members. We reserve the right to form, change, dissolve or merge any Cooperative at any time.
You may develop advertising media for your own use, at your own cost providing all media is in compliance with current branding and System Standards. We must approve the advertising materials in advance and in writing. We do not have an advertising council composed of franchisees.
We have the sole right to market on the Internet and use our trademarks on the Internet, including all use of websites, domain names, URLs, directory addresses, email addresses, metatags, linking, advertising, cobranding and other arrangements, and in all other forms of electronic media. You may not separately register any domain name or any portion of a domain name containing our trademarks or participate or market on any website or other form of electronic media (including social technology, social media and social networking platforms) using our trademarks unless you first obtain written approval from us. Your general conduct on the Internet or other forms of electronic media, including your use of our trademarks or any advertising, is subject to the terms and conditions of the Franchise Agreement and any other rules, requirements or policies that we may identify from time to time.
Computer Systems and Software
We will grant you access to the Proprietary Software and select software. The Proprietary Software is designed to provide you assistance with customer relationship management, quoting process, job flow, custom container design, calendaring, reporting, and transportation management.
You will be responsible for purchasing any additional hardware, upgrades, software, Internet connection and service, dedicated telephone and power lines, and other computer related accessories, peripherals, and equipment. Currently, we require you to purchase data processing software (e.g., Microsoft Office suite products) and an accounting software program (e.g., QuickBooks Pro) to go along with our Proprietary Software. You will be responsible for maintaining a high-speed internet access for the computer system. You will be responsible for maintaining the one or more e-mail addresses assigned to you by us. You will use such e-mail address(es) at all times when communicating within the System and to the public." We currently estimate the costs of purchasing these items to range from approximately $2,000 to $4,000, but these estimated costs may change over time as technology changes.
You will be responsible for maintaining the computer system and software programs in good repair at your expense.
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, franchisees may be required to participate in local advertising cooperatives, if established in their area. These cooperatives are designed to administer advertising programs and develop promotional materials for local advertising, subject to Craters & Freighters' approval. If a cooperative exists in the franchisee's area when they sign the Franchise Agreement, or if one is established during the term of the agreement, the franchisee must become a member and adhere to its rules. The fees for these cooperatives are set by the cooperative itself but cannot exceed one percent (1%) of Adjusted Gross Sales. Craters & Freighters-owned outlets contribute to the fund on the same basis as franchisees. Craters & Freighters retains the right to form, change, dissolve, or merge any Cooperative at any time. Each Cooperative established must prepare annual statements which will be available for review by its members.
In addition to cooperative advertising, Craters & Freighters franchisees may develop their own advertising media, provided it complies with branding and System Standards and receives written approval from Craters & Freighters. However, Craters & Freighters maintains sole control over internet marketing and the use of its trademarks online, including websites, domain names, and social media. Franchisees need written approval to use Craters & Freighters' trademarks online.
The FDD also describes a Marketing Fund, which is separate from local advertising cooperatives. Franchisees must contribute to this fund, along with company-owned or affiliate-owned Craters & Freighters businesses, at the same percentage rate. The Marketing Fund is used to promote the Craters & Freighters system through various media channels and promotional activities. While franchisees contribute to the Marketing Fund, Craters & Freighters is not obligated to spend the funds specifically for the benefit of individual franchisees or in proportion to their contributions. Expenditures from the Marketing Fund during the last fiscal year ending December 31, 2024, were allocated as follows: 2.6% on production, 81.5% on media placement, 3.5% on administrative expenses, and 12.4% on other expenditures.