How does Crave account for advertising expenses?

According to Crave's 2025 Franchise Disclosure Document, the company expenses advertising costs as they are incurred. The total advertising expenses for the years ending December 31, 2024, 2023, and 2022 were $50,375, $99,102, and $25,856, respectively. This means that Crave recognizes advertising expenses in the same period that the costs are incurred, rather than capitalizing and amortizing them over a longer period.

For a prospective franchisee, this information is primarily relevant in understanding Crave's financial practices as a franchisor. It provides insight into how Crave manages and reports its advertising expenditures, which can be an indicator of the company's investment in brand promotion. Additionally, franchisees contribute to a Brand Development Fund, a portion of which can be used to prepare and place advertising, including costs for television, radio, magazine, and other media programs. Up to 5% of the fund may be used to prepare and place advertising that is primarily a solicitation of franchise sales.

The Brand Development Fund is held in a non-interest bearing account separate from Crave's other funds. These funds are used to cover the costs of maintaining, administering, and preparing advertising materials. Crave has the right to reimburse itself from the fund for costs related to fund activities, including employee salaries and overhead. A statement of the fund's operations is prepared annually by Crave's accountants and is available to franchisees upon written request. Crave is not obligated to spend any amount on advertising in a franchisee's specific area or designated territory. Franchisees should be aware that Crave controls social media initiatives and that franchisees must adhere to system standards regarding social media use.