What is the Golden Krust Caribbean Restaurant franchisee's obligation regarding payment of the advertising fee?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
ontributions to the Advertising Fund during the preceding twelve (12) month period.
You will also be required to expend 1% of the annual Gross Sales from the operation of your Restaurant on local marketing, including but not limited to digital marketing.
All advertising, promotion and marketing must be completely clear and factual and not misleading and conform to the highest standards of ethical marketing and the promotion policies which we require from time to time. You may prepare your own advertising materials, however, samples of all advertising, promotional and marketing materials that we have not prepared or previously approved must be submitted for approval before you use them. If you do not receive written disapproval within fifteen (15) days after we receive the materials, we will be deemed to have given the required approval. You may not use any advertising, promotional materials or web-based advertising that we have disapproved.
Except as disclosed above, there are no other adverting funds or programs that you must participate in.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, OPERATIONS MANUAL, WEBSITE, AND TRAINING (FDD pages 18–23)
What This Means (2024 FDD)
According to the 2024 Golden Krust Caribbean Restaurant Franchise Disclosure Document, franchisees are required to expend 1% of their annual Gross Sales on local marketing, which includes digital marketing. This local marketing expenditure is separate from any advertising fees that Golden Krust Caribbean Restaurant may collect for the Advertising Fund. The franchisor reserves the right to defer or reduce contributions from any franchisee to the Advertising Fund, and can also reduce or suspend contributions to, and operations of, the Advertising Fund with thirty days prior written notice. The franchisor can also terminate or reinstate the Advertising Fund.
Golden Krust Caribbean Restaurant does not collect the same advertising fee amount from all franchisees and retains the right to do so. They may reduce or waive the advertising fee in certain instances for specific franchisees, including shareholders or employees (along with their children and/or heirs) of the franchisor or its affiliates. There are franchisees who pay a lower or no advertising fee.
The franchisor directs all programs financed by the Advertising Fund and has sole discretion over creative concepts, materials, endorsements, geographic placement, market placement, and media allocation of the programs. The Advertising Fund may be used to cover costs related to preparing advertising materials, administering regional advertising programs, purchasing media advertising, employing agencies, and supporting public relations and market research. The franchisor will periodically furnish franchisees with samples of advertising, marketing, and promotional materials at no cost, with multiple copies available at the franchisee's cost of production plus shipping, handling, and storage charges.
If the Advertising Fund is terminated, all unspent monies will be spent or distributed to franchisees in proportion to their contributions to the fund during the preceding twelve-month period, at the franchisor's discretion. In 2023, the Advertising Fund spent 45% on digital marketing and 55% on traditional marketing, including radio, design, and production. The Advertising Fund is not audited. The franchisor has no obligation to ensure that expenditures in any geographic area are proportionate to contributions from franchisees in that area, or that any franchisee will benefit directly or in proportion to its contribution.