What is the purpose of the funds reserved for Individual Advertising Expense for a Craters & Freighters franchise?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Each year, you must spend the greater of (a) $6,000, or (b) one percent (1%) of your Adjusted Gross Sales for the prior calendar year, on advertising and promotion of your Franchised Business in your Territory ("Individual Advertising Expense"). In either case, the amount of the Individual Advertising Expense will not exceed $18,000. You must submit annual reports to us reflecting your advertising expenditures. These funds are reserved only for marketing, promotions, and advertising of your Franchised Business. This expense will be incurred in addition to your required contributions to the Marketing Fund, as described below. You may not advertise outside your Territory without our approval, which may be withheld in our sole discretion. We reserve the right to require you to pay the amount of the Individual Advertising Expense to an approved supplier of ours. We will count all amounts you contribute to a Cooperative towards your required Individual Advertising Expense.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 22–29)
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, franchisees are required to allocate funds for individual advertising expenses. Each year, a franchisee must spend the greater of $6,000 or 1% of their Adjusted Gross Sales from the previous calendar year on advertising and promotion within their designated territory. However, the maximum amount required for this individual advertising expense is capped at $18,000.
These funds are specifically earmarked for marketing, promotions, and advertising efforts that directly benefit the franchisee's Craters & Freighters business. This expense is separate from the mandatory contributions to the national Marketing Fund. Franchisees are obligated to submit annual reports detailing their advertising expenditures to Craters & Freighters.
It's important to note that franchisees cannot advertise outside their assigned territory without obtaining prior approval from Craters & Freighters, which can be withheld at their discretion. Craters & Freighters retains the right to mandate that franchisees pay the Individual Advertising Expense to one of their approved suppliers. Any contributions made to a Cooperative will count towards the franchisee's required Individual Advertising Expense.