Is the advertising fee for a Golden Krust Caribbean Restaurant segregated into a special account?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
You agree to pay to us a weekly advertising fee equal to One- and one-half percent (1.5%) of the Gross Sales of the Restaurant, payable to us by our sweep via authorized electronic funds transfer (EFT) from your operating account. This advertising fee shall accompany each weekly royalty payment, but will be segregated by us in a special account maintained solely for the advertising fund. 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. We will prepare an unaudited annual statement of monies collected and costs incurred by the Advertising Fund and furnish it to you upon written request. We have the right to cause the Advertising Fund to be incorporated or operated through a separate entity at such time as it deems appropriate, and the successor entity will have all of the rights and duties described here. If the Advertising Fund is terminated, all unspent monies on the date of termination will, at our discretion, be spent or distributed to franchisees in proportion to their respective contributions to the Advertising Fund during the preceding twelve (12) month period.
Source: Item 22 — CONTRACTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, a portion of the franchisee's payments is allocated to an advertising fund. Specifically, franchisees must pay a weekly advertising fee equivalent to 1.5% of the restaurant's gross sales. This fee is collected via electronic funds transfer (EFT) along with the weekly royalty payment.
Golden Krust Caribbean Restaurant states that it will segregate the advertising fees into a special account that is maintained solely for the advertising fund. Any interest earned on the advertising fund will be used to cover advertising costs before using other assets of the fund.
Golden Krust Caribbean Restaurant will furnish an unaudited annual statement of monies collected and costs incurred by the advertising fund to franchisees upon written request. The document states that Golden Krust Caribbean Restaurant has the right to incorporate the advertising fund or operate it through a separate entity when deemed appropriate. If the advertising fund is terminated, any unspent monies will be spent or distributed to franchisees in proportion to their contributions during the preceding 12-month period.