Is the advertising fee for Golden Krust Caribbean Restaurant franchises segregated into a special account?

According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, franchisees are required to pay a weekly advertising fee equivalent to 1.5% of the restaurant's gross sales. This fee is collected along with the weekly royalty payment. However, Golden Krust Caribbean Restaurant specifies that it will segregate the advertising fees into a special account that is maintained solely for the advertising fund. This indicates that while the payment is collected together with royalties, the advertising portion is earmarked and managed separately for advertising purposes.

Golden Krust Caribbean Restaurant directs all programs financed by the Advertising Fund and has sole discretion over the creative concepts, materials, endorsements, geographic placement, market placement, and media allocation of the programs. The advertising fund may be used to pay for preparing and producing video, audio, and written advertising materials; administering regional and multi-regional advertising programs, including social media and electronic media advertising; purchasing direct mail and other media advertising; employing advertising, promotion, and marketing agencies; and supporting public relations, market research, and other advertising, promotion, and marketing activities.

The FDD also states that the Advertising Fund will be accounted for separately from Golden Krust Caribbean Restaurant's other funds and will not be used to defray general operating expenses, except for reasonable salaries, administrative costs, travel expenses, and overhead incurred in administering the Advertising Fund. The franchisor may spend more or less than the aggregate contribution to the Advertising Fund in any fiscal year and may borrow from others to cover deficits or invest any surplus for future use. All interest earned on monies contributed to the Advertising Fund will be used to pay advertising costs before other assets of the Advertising Fund are expended. In 2023, 45% of the Advertising Fund was spent on digital marketing and 55% was spent on traditional marketing, including radio, design, and production. The Advertising Fund is not audited.

It is important to note that Golden Krust Caribbean Restaurant does not collect the same amount as an Advertising Fee from all franchisees and reserves the right to reduce or waive the advertising fee in certain instances, such as for franchisees who are shareholders or employees of the franchisor or its affiliates. The franchisor has no obligation to ensure that expenditures by the Advertising Fund in any geographic area are proportionate to the contributions from franchisees in that area, nor that any franchisee will benefit directly or in proportion to its contribution. No funds from the Advertising Fund are used to directly solicit new franchise sales; however, such funds may be used for websites which include franchise sales pages. Golden Krust Caribbean Restaurant does not have any advertising cooperatives.