Can Craters & Freighters require a franchisee to pay the Individual Advertising Expense to a designated supplier?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Individual Advertising Expense | Greater of (a) $6,000, or (b) one percent (1%) of your Adjusted Gross Sales for the prior calendar year. In either case, this amount will not exceed $18,000. | As incurred. | Each year, you must spend this amount on advertising and promotion of your Franchised Business in your Territory. You must submit annual reports to us reflecting advertising expenditures, which must be utilized only for marketing, promotions, and advertising of the Franchised Business. We reserve the right to require you to pay the amount of the Individual Advertising Expense to a designated or approved supplier of ours. |
| Technology Fee | Currently $500 per month. We reserve the right to increase this amount upon 30 days written notice to you. However, this amount will not exceed $750 per month. | Same as Royalty Fee. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, franchisees may be required to pay their Individual Advertising Expense to a designated supplier. The Individual Advertising Expense is the greater of $6,000 or 1% of the franchisee's Adjusted Gross Sales for the prior calendar year, but will not exceed $18,000.
Each year, franchisees must spend this amount on advertising and promotion of their Craters & Freighters franchise in their territory. Franchisees are required to submit annual reports to Craters & Freighters reflecting these advertising expenditures, which must be used only for marketing, promotions, and advertising of the franchised business.
Craters & Freighters retains the right to mandate that franchisees pay the Individual Advertising Expense directly to a supplier that Craters & Freighters designates or approves. This provides Craters & Freighters with control over how advertising funds are spent, potentially ensuring brand consistency and leveraging bulk purchasing power.
For a prospective franchisee, this means they might not have complete autonomy over their local advertising spend and could be required to use specific vendors chosen by Craters & Freighters. It is important to understand which suppliers are approved and how this might affect the franchisee's ability to tailor advertising to their specific local market.