GLOSSARY

Ad fund (marketing fee)

The ad fund is a second ongoing percentage of sales — typically 1–4% on top of the royalty — that franchisees pay into a franchisor-controlled marketing pool.

Disclosed in Item 6 alongside the royalty, the ad fund is money you must spend but don't control: the franchisor decides how it's used, and national campaigns may or may not reach your market. Some agreements also require minimum local spend on top of the fund contribution.

When comparing brands, add royalty + ad fund + required technology fees into one "total ongoing drag" figure — a 5% royalty with a 4% ad fund costs more than a 7% royalty with 1%, and Item 6's table layout makes that easy to miss.