How must a Craters & Freighters franchisee expend their Individual Advertising Expense?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Sales generated by the Franchised Business, so long as Franchisor provides Franchisee with thirty (30) days' notice of such increase.
- 3.5 Individual Advertising Expense. Each year throughout the duration of this Agreement, Franchisee must spend the greater of (a) Six Thousand Dollars ($6,000) or (b) one percent (1%) of the Adjusted Gross Sales for the prior calendar year on advertising and promotion of the Franchised Business in the Territory ("Individual Advertising Expense"); provided, however, the Individual Advertising Expense will not exceed Eighteen Thousand Dollars ($18,000) on an annual basis, although Franchisee has the right to spend more than such amount. Franchisee must submit annual reports to Franchisor reflecting advertising expenditures, which must be utilized only for marketing, promotions, and advertising of the Franchised Business. Franchisor reserves the right to require Franchisee to pay a portion or the entire amount of such Individual Advertising Expense to an approved supplier of Franchisor.
- 3.6 Technology Fee.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, franchisees are required to spend a certain amount annually on local advertising. This "Individual Advertising Expense" must be the greater of $6,000 or 1% of the previous calendar year's Adjusted Gross Sales, but it will not exceed $18,000 annually. However, the franchisee has the option to spend more than $18,000.
The Individual Advertising Expense must be used for marketing, promotions, and advertising of the Craters & Freighters franchised business within the franchisee's territory. Franchisees are required to submit annual reports to Craters & Freighters reflecting these advertising expenditures.
Craters & Freighters retains the right to mandate that franchisees pay a portion or the entire Individual Advertising Expense to an approved supplier of the franchisor. Additionally, if a marketing cooperative is established in the franchisee's area, all contributions to that cooperative will count toward the Individual Advertising Expense. This gives Craters & Freighters some control over how these advertising funds are spent, potentially directing them towards preferred vendors or coordinated marketing efforts.