Can Crave reimburse itself from the Brand Development Fund for costs related to collecting the Brand Development Fee?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
adio, magazine, billboard, newspaper, direct mail and other media programs and activities, for conducting marketing surveys, test marketing, employing advertising agencies to assist therewith, and providing promotional brochures, coupons and other marketing materials to all franchisees of the System). The Fund shall be held in a non-interest bearing account separate from our other funds, and shall not be used to defray any of our general operating expenses, except that we have the right to reimburse ourselves out of the Fund for the total costs (including indirect costs such as salaries for our employees who devote time and effort to Fund related activities and overhead expenses) of developing, producing and distributing any advertising materials and collecting the Brand Development Fee (including attorneys', auditors' and accountants' fees and other expenses incurred in connection with collecting any Brand Development Fee). We also reserve the right to use a portion of the Fund to subsidize the cost of presenting refresher training and/or a franchisee meeting. The Fund and its earnings shall not otherwise inure to our benefit except that any resulting technology and intellectual property shall be deemed our property.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave has the right to reimburse itself from the Brand Development Fund for specific costs. The Brand Development Fund can be used to cover the total costs associated with developing, producing, and distributing advertising materials. Importantly, this also includes the costs of collecting the Brand Development Fee. These costs can include indirect expenses such as employee salaries for time spent on fund-related activities and overhead expenses. Crave can also use the fund to cover attorneys', auditors', and accountants' fees and other expenses incurred while collecting the Brand Development Fee.
This means that a portion of the Brand Development Fees paid by franchisees may be used to cover Crave's costs of administering and collecting those fees. While this is a common practice in franchising, prospective franchisees should understand that the Brand Development Fund is not exclusively used for advertising and marketing, but also for these administrative purposes.
Crave also states that it may use up to five percent of the fund to prepare and place advertising that is primarily a solicitation of franchise sales. Crave will provide an annual statement of the fund's operations prepared by its accountants, available to franchisees upon written request. The cost of the statement is paid by the fund. Crave is not required to have the fund statement audited, but if it chooses to, it will be at the fund's expense.