What is the role of Craters & Freighters regarding the Marketing Fund?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
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. We are not required to spend an amount from the Marketing Fund on local marketing or advertising in your Territory or the territory of any franchisee within our System. We do not spend any of funds collected by the Marketing Fund on directly soliciting new franchisees.
Any unused funds in any calendar year will be applied to the following year's funds, and we reserve the right to contribute or loan additional funds to the Marketing Fund on any terms we deem reasonable. Since the Marketing Fund is not audited, audited financial statements are not available to franchisees. Upon request, we will make available to you an annual accounting for the Marketing Fund that shows how the Marketing Fund proceeds have been spent for the previous year.
During our last fiscal year ending December 31, 2024, expenditures from the Marketing Fund were as follows: 2.6% on production, 81.5% on media placement, 3.5% on administrative expenses, and 12.4% on other expenditures relating to network sales and support, network software and hosting expenses, and network telephone supporting services.
We are not required to spend an amount on advertising in the territory where you are or will be located. We do not have any local or regional advertising cooperatives. We may designate any geographic area in which two or more Craters & Freighters outlets are located as a region for establishing a Cooperative. The members of the Cooperative for any area will consist of all Craters & Freighters outlets, whether franchised or operated by
us or our Affiliates. We will determine in advance how each Cooperative will be organized and governed and when it must commence operations. Accordingly, we do not currently have any governing documents available for review. Each Cooperative will be organized for the sole purposes of administering advertising programs and developing, subject to our approval, promotional materials for use by the members in local advertising. If a Cooperative has been established for a geographic area where your Craters & Freighters Franchised Business is located when the Franchise Agreement is signed, or if any Cooperative is established during the term of the Franchise Agreement, you must become a member of the Cooperative and abide by the rules of the Cooperative. Cooperatives will set their own fees, which cannot exceed one percent (1%) of Adjusted Gross Sales. Franchisor-owned outlets must contribute to the fund on the same basis as franchisees. Each Cooperative established must prepare annual statements which will be available for review by its members. We reserve the right to form, change, dissolve or merge any Cooperative at any time.
You may develop advertising media for your own use, at your own cost providing all media is in compliance with current branding and System Standards. We must approve the advertising materials in advance and in writing. We do not have an advertising council composed of franchisees.
We have the sole right to market on the Internet and use our trademarks on the Internet, including all use of websites, domain names, URLs, directory addresses, email addresses, metatags, linking, advertising, cobranding and other arrangements, and in all other forms of electronic media. You may not separately register any domain name or any portion of a domain name containing our trademarks or participate or market on any website or other form of electronic media (including social technology, social media and social networking platforms) using our trademarks unless you first obtain written approval from us. Your general conduct on the Internet or other forms of electronic media, including your use of our trademarks or any advertising, is subject to the terms and conditions of the Franchise Agreement and any other rules, requirements or policies that we may identify from time to time.
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 administers the Marketing Fund, which is intended to maximize general brand recognition for the Craters & Freighters system. Craters & Freighters may use a professional advertising agency or media buyer to assist in administering the fund. The funds are used exclusively to promote the Craters & Freighters system.
The FDD specifies how Craters & Freighters may expend the Marketing Fund monies, including the creation, production, and placement of advertising in various media (local, regional, or national), developing promotional materials, and undertaking public relations activities. The funds can also cover the costs of maintaining, administering, and directing marketing efforts, including website maintenance, employing agencies, purchasing promotional items, attending trade shows, and providing marketing materials to franchisees. These costs may include a proportionate salary share of employees or affiliates involved in marketing, advertising, promotion, or fund administration, as well as administrative costs, salaries, and overhead expenses.
Craters & Freighters, its affiliates, and authorized representatives may be reimbursed from the Marketing Fund for administrative costs, independent audits, accounting, bookkeeping, reporting and legal expenses, taxes, and other reasonable direct or indirect expenses related to programs funded by the Marketing Fund. The FDD states that no part of the Marketing Fund will be used to defray Craters & Freighters' general operating expenses, other than those reasonably allocable to marketing, advertising, or promotional activities.
For the fiscal year ending December 31, 2024, Craters & Freighters reported the following expenditures from the Marketing Fund: 2.6% on production, 81.5% on media placement, 3.5% on administrative expenses, and 12.4% on other expenditures relating to network sales and support, network software and hosting expenses, and network telephone supporting services. Craters & Freighters will provide an annual accounting for the Marketing Fund that shows how the proceeds have been spent for the previous year, upon request.