Can Craters & Freighters reimburse themselves from the Marketing Fund for administrative costs?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
The Marketing Fund will be used exclusively for the purpose of promoting the System. We may expend Marketing Fund monies towards the creation, production, and/or placement of advertising in local, regional, or national media including, but not limited to, broadcast, print, electronic, direct mail, radio, television, or other media), developing promotional materials, and undertaking public relations activities on behalf of the entire System or on behalf of a particular portion of the System. The Marketing Fund may also be used to meet any and all costs of maintaining, administering, directing, and preparing marketing, advertising, and promotional efforts and programs including, but not limited to: direct mail advertising; local, regional, and national promotions; call centers; market research; public relations activities; developing and maintaining Franchisor's Website and franchisee geosites (including your Geosite); employing marketing, advertising, and public relations agencies (including the payment of commissions); purchasing promotional items; attending trade shows; providing other marketing materials and services to franchised businesses operating under the System; and other marketing, advertising, and promotional activities. These costs may include the proportionate salary share of employees of ours or any Affiliate of ours who devote time and render services for marketing, advertising, or promotion, or the administration of the Marketing Fund; such costs may include administrative costs, salaries, and overhead expenses. No part of the Marketing Fund will be used by us to defray any of our general operating expenses, other than those reasonably allocable to the marketing, advertising, or promotional activities described here or other activities reasonably related to the administration or direction of the Marketing Fund. We, any Affiliate of ours, and our authorized representatives may be reimbursed from the Marketing Fund for administrative costs, independent audits, reasonable accounting, bookkeeping, reporting and legal expenses, taxes and all other reasonable direct or indirect expenses that we, any Affiliate of ours, and our authorized representatives may incur relating to programs funded by the Marketing Fund.
The Marketing Fund is intended to maximize the general brand recognition of the System, and we are not obligated to expend Marketing Fund monies on your behalf or benefit or to expend Marketing Fund monies equivalent or proportionate to your contributions on your behalf or benefit. We do not guarantee that advertising expenditures from the Marketing Fund will benefit you or any other franchisee directly, on a pro rata basis, or at all. We do not derive revenue or any other material consideration as a result of your contributions to the Marketing Fund.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 22–29)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, Craters & Freighters, its affiliates, and authorized representatives can be reimbursed from the Marketing Fund for administrative costs. These costs can include administrative expenses, salaries, and overhead related to marketing, advertising, or promotion, as well as the administration of the Marketing Fund itself.
Specifically, Craters & Freighters can use the Marketing Fund to cover costs related to marketing, advertising, and promotional efforts. This includes direct mail advertising, local, regional, and national promotions, call centers, market research, and public relations activities. It also extends to developing and maintaining Craters & Freighters' website and franchisee geosites, employing marketing agencies, purchasing promotional items, attending trade shows, and providing marketing materials and services to franchisees.
Furthermore, the reimbursement can cover independent audits, reasonable accounting, bookkeeping, reporting, legal expenses, taxes, and other direct or indirect expenses related to programs funded by the Marketing Fund. However, the FDD states that the Marketing Fund cannot be used to defray Craters & Freighters' general operating expenses, except those reasonably allocable to marketing, advertising, promotion, or the administration of the Marketing Fund.
During the last fiscal year ending December 31, 2024, Craters & Freighters' expenditures from the Marketing Fund included 3.5% on administrative expenses. This demonstrates that Craters & Freighters does allocate a portion of the Marketing Fund for administrative purposes, as permitted by the terms outlined in the FDD.