What expenses of Golden Corral can be defrayed by the National Fund?
Golden_Corral Franchise · 2025 FDDAnswer from 2025 FDD Document
pro rata from the placement of advertising. (Franchise Agreement, Section 11.2.1.)
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- The National Fund will be used exclusively to meet costs of maintaining, administering, researching, directing, creating, and preparing advertising and/or promotional activities and all other activities which Golden Corral believes will increase System revenues and/or enhance the image of the System and/or Proprietary Marks, including the costs of preparing, creating and conducting promotional programs involving use of stored value gift cards and other forms of non-cash payment systems; customer loyalty programs and similar types of programs; advertising campaigns in various media and the Internet; direct mail and outdoor billboard advertising; marketing surveys and other public relations activities, customer feedback and similar activities; employing advertising and/or public relations agencies; product development; and providing promotional, point of purchase/in-restaurant materials and other marketing materials for franchisees and company-owned Restaurants in the System. (Franchise Agreement, Section 11.2.2.)
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- GCC will, for each of its company-owned Restaurants, contribute to the National Fund on the same basis as franchisees (Franchise Agreement, Section 11.2.3).
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- Golden Corral will maintain National Fund contributions in an account or accounts separate from the other monies of Golden Corral. Golden Corral will not use such sums to defray any of Golden Corral's expenses, except for reasonable administrative costs and overhead, if any, Golden Corral may incur in activities reasonably related to the administration or direction of the National Fund or advertising programs for Franchisees and the System, including the costs of enforcing contributions to the National Fund required under the Franchise Agreement and the costs of preparing the statement of operations which includes contributions and expenditures and the cost of personnel for creating and implementing the Fund's activities. The National Fund and its earnings will not otherwise benefit Golden Corral. Golden Corral will maintain separate bookkeeping accounts for the National Fund (Franchise Agreement, Section 11.2.4).
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- Golden Corral anticipates that all contributions to and earnings of the National Fund will be expended for advertising and/or promotional purposes during the taxable year within which the contributions are made. If, however, excess amounts remain in the National Fund at the end of the taxable year, Golden Corral will expend in the following taxable year(s) monies first out of accumulated earnings from previous years, next out of earnings in the current year, and finally from contributions. Any deficits will be paid from future contributions (Franchise Agreement, Section 11.2.5).
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- The National Fund is not and will not be an asset of Golden Corral.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 32–48)
What This Means (2025 FDD)
According to the 2025 Golden Corral FDD, the National Fund is primarily used to enhance the brand's image and increase system revenues. Specifically, the National Fund can defray costs related to maintaining, administering, researching, directing, creating, and preparing advertising and promotional activities. This includes creating promotional programs, advertising campaigns across various media, direct mail, outdoor advertising, marketing surveys, public relations, and customer feedback activities. The fund also covers the costs of employing advertising agencies, product development, and providing marketing materials for both franchised and company-owned Golden Corral restaurants.
Golden Corral itself can use the National Fund to cover reasonable administrative costs and overhead incurred while administering the fund or advertising programs. This includes the costs of enforcing contributions to the National Fund, preparing financial statements related to the fund's operations, and compensating personnel involved in creating and implementing the fund's activities. However, the FDD explicitly states that the National Fund and its earnings should not otherwise benefit Golden Corral, ensuring that the funds are primarily used for the benefit of the franchise system.
For the fiscal year ending January 1, 2025, the FDD provides a breakdown of how the National Fund's expenditures were allocated. A significant portion, 78.3%, was spent on media advertising, while 11.9% went towards creative and production expenses for television commercials and promotional materials. Agency retainers and fees accounted for 9.1% of the expenditures, and 0.6% was allocated to national charitable events/sponsorships and convention expenses. Notably, 0% was spent on administrative fees during this period. The FDD also confirms that Golden Corral and its affiliates did not receive any payments for providing goods or services to the National Fund during that fiscal year, and no National Fund fees were used for soliciting franchise sales.