Are advertising contributions from Crepe De Licious franchisees commingled in general funds?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
Advertising Fees The Company maintains and administers an advertising fund (the "Advertising Fund"). The advertising contributions may be commingled in the general funds, but administratively segregated to form the Advertising Fund. All franchisees must contribute to the fund at the same rate of 3 percent of their respective gross revenues. The Advertising Fund may be used by the Company, in its sole discretion, to meet any and all costs of advertising for the franchise's concept as a whole. The Company has determined the advertising services provided to franchisees are highly interrelated with the franchise right and therefore not distinct. As a result, revenues for advertising services are recognized when the related revenue occurs. Revenues for these services are typically billed in the first week of the month and paid within thirty days. These revenues are presented as franchise contributions for advertising and other services. Expenses incurred to provide these services are presented as Franchise advertising expense and other services.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to Crepe De Licious's 2025 Franchise Disclosure Document, advertising contributions from franchisees may be commingled with the company's general funds. However, the document specifies that these funds are administratively segregated to form the Advertising Fund. This means that while the money might be in the same account, it is tracked separately for accounting purposes.
All Crepe De Licious franchisees are required to contribute to the Advertising Fund at a rate of 3 percent of their gross revenues. The FDD states that Crepe De Licious has the sole discretion to use the Advertising Fund to cover any costs of advertising for the franchise concept as a whole.
The FDD also clarifies that Crepe De Licious considers the advertising services provided to franchisees as highly interrelated with the franchise right and, therefore, not distinct. As a result, revenues for advertising services are recognized when the related revenue occurs, typically billed in the first week of the month and paid within thirty days. These revenues are reported as franchise contributions for advertising and other services, while the expenses are presented as franchise advertising expense and other services.