What are the requirements for individual advertising expenses for a Craters & Freighters franchise?
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. Each month throughout the duration of this Agreement, Franchisee must pay to Franchisor a technology fee ("Technology Fee") in the amount of Franchisor's thencurrent rate for such Technology Fee, relating to software subscription(s), up to seven (7) email accounts established for the Franchised Business, Geosite domain registration, other technology enhancements, and maintenance and support of the same provided by Franchisor or its designee(s).
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 minimum amount each year on local advertising. This is referred to as the Individual Advertising Expense. The minimum annual spending requirement is the greater of $6,000 or 1% of the previous calendar year's Adjusted Gross Sales. However, the maximum a franchisee is required to spend is $18,000 annually, although they have the option to spend more.
Craters & Freighters requires franchisees to submit annual reports detailing their advertising expenditures. These funds must be used exclusively for marketing, promotions, and advertising related to the franchised business. This ensures that the money is being used to grow the business and promote the Craters & Freighters brand locally.
It's important to note that Craters & Freighters retains the right to direct franchisees to pay some or all of their Individual Advertising Expense to an approved supplier of the franchisor. This gives Craters & Freighters some control over how the advertising funds are spent, potentially ensuring brand consistency and access to preferred vendors. Additionally, any contributions to a marketing cooperative, if one exists in the franchisee's area, will count towards the Individual Advertising Expense.