What is the purpose for which a Craters & Freighters franchisee must utilize their Individual Advertising Expense?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
p to two percent (2%) of the Adjusted 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
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, a franchisee is required to use their Individual Advertising Expense specifically for marketing, promotions, and advertising of their Craters & Freighters franchised business within their designated territory. This expense is intended to help franchisees attract and retain customers in their local market.
The minimum a Craters & Freighters franchisee must spend annually for advertising is the greater of $6,000 or 1% of the previous calendar year's Adjusted Gross Sales, but this expense is capped at $18,000 annually. While franchisees have the option to exceed this amount, the franchisor retains the right to mandate that these advertising funds be directed to an approved supplier. Franchisees are also obligated to submit annual reports to Craters & Freighters detailing their advertising expenditures.
This requirement ensures that Craters & Freighters franchisees actively promote their businesses, contributing to brand awareness and market penetration. By allowing some flexibility in advertising spend (between the 1% and fixed amounts) while also setting a maximum, Craters & Freighters aims to balance the need for local marketing with cost control. The franchisor's ability to direct funds to approved suppliers also gives them some control over brand consistency and the effectiveness of advertising campaigns.