Are Golden Corral franchisees required to make contributions to the Funds?
Golden_Corral Franchise · 2025 FDDAnswer from 2025 FDD Document
termine, maintain, and administer all national and/or regional advertising funds ("Funds") which may hereafter be established pursuant to Sections 11.2 and 11.3 hereof, and shall have sole discretion over the concepts, materials, media, type, nature, scope, frequency, place, form, copy, layout, and content of all national, regional, and local advertising, and accordingly agree as follows:
- 11.1 Marketing Contribution: Franchisee shall expend or contribute weekly, on advertising, as required in Section 4.3 hereof, not less than two percent (2%) of its gross sales or more than six percent (6%) of its gross sales, which percentage Franchisor may in its sole discretion set from time to time in the Manuals or otherwise in writing. Franchisor may pursuant to the terms and conditions of Sections 11.2 and 11.3 hereof, establish national and/or regional advertising funds for advertising for the System. Franchisee shall allocate such weekly expenditures and contributions among local advertising and a national and/or regional advertising fund in such a manner as Franchisor shall, in its sole discretion, direct from time-to-time in the Manuals or otherwise in writing. Advertising expenditures as defined herein applies to electronic and print media advertising to include but not limited to television, radio, cable, billboards, - digital media, social media, mobile media, newspapers and magazines as well as in-Restaurant point of sale materials but excluding costs of discounted or free promotional meals. Franchisee shall be free to conduct additional advertising at Franchisee's separate expense, in accordance with Section 11.7 hereof.
- 11.2 National Fund: Franchisee acknowledges that Franchisor has established Funds for the System. Franchisee further agrees to make contributions to the Funds as required under Section 4.3. The Funds shall be maintained and administered by Franchisor or its designee, as follows:
- 11.2.1 Franchisee agrees and acknowledges that the national advertising fund ("National Fund") is intended to maximize general public recognition and acceptance of the Proprietary Marks for the benefit of all restaurants within the System, and that Franchisor and its designees are not obligated in administering the National Fund to make expenditures for Franchisee which are equivalent or proportionate to Franchisee's contribution or to ensure that any particular Franchisee benefits directly or pro rata from the placement of advertising.
Source: Item 22 — CONTRACTS (FDD pages 84–85)
What This Means (2025 FDD)
According to Golden Corral's 2025 Franchise Disclosure Document, franchisees are required to contribute to both the National Fund and potentially a Regional Fund. Specifically, franchisees must contribute to the National Fund weekly, as detailed in Section 4.3 of the agreement. Additionally, Golden Corral may establish regional advertising funds, and if a Regional Fund is established for the franchisee's area, the franchisee is obligated to become a member and contribute as required under Sections 4.3 and 11.1. These contributions are essential for advertising and promoting the Golden Corral system.
The amount that a Golden Corral franchisee contributes weekly towards advertising can range from two percent to six percent of its gross sales. The specific percentage is set by Golden Corral and communicated in the manuals or in writing. Franchisees allocate these advertising funds between local advertising and the national or regional advertising funds, as directed by Golden Corral. These advertising expenditures cover various media, including electronic, print, digital, social, and mobile platforms, as well as in-restaurant point-of-sale materials, but exclude costs of discounted or free promotional meals.
Golden Corral maintains control over how these funds are spent, with the aim of maximizing brand recognition and acceptance. Neither the National Fund nor any Regional Fund is a trust fund, and Golden Corral does not have a fiduciary responsibility to franchisees regarding the collection or use of these funds. While it's anticipated that all contributions will be used for advertising and promotional purposes within the taxable year, any excess amounts are carried over and used in subsequent years. Franchisees have the right to review an annual statement of operations for the National Fund, prepared by an independent certified public accountant.
Franchisees should be aware that Golden Corral can grant exemptions from Regional Fund membership under certain conditions, requiring the franchisee to spend an equivalent amount on local advertising approved by Golden Corral. This provides some flexibility, but the decision to grant an exemption rests solely with Golden Corral. The funds are used to enhance the image of the Golden Corral system and increase revenues, and Golden Corral also contributes to these funds for its company-owned restaurants on the same basis as franchisees.