Does 360 Painting assume a fiduciary duty in administering the Marketing Fund?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
All monies paid into the Marketing Fund will be accounted for separately from our general operating revenues. We anticipate that all contributions to the Marketing Fund will be expended during the Marketing Fund's fiscal year in which they are received. The Marketing Fund is not a trust, and we assume no fiduciary duty in administering the Marketing Fund. Marketing Fund surpluses, if any, may be expended in the following fiscal year(s). We may advance money to the Marketing Fund from time to time. In this event, we may be reimbursed by the Marketing Fund for the monies advanced, including a reasonable interest rate. The Marketing Fund will not be audited, but at your request you may receive an annual report of expenditures and advertising contributions for the fiscal year most recently ended.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–38)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting does not assume a fiduciary duty in administering the Marketing Fund. The document explicitly states that the Marketing Fund is not a trust. 360 Painting retains sole discretion over the concepts, materials, and media used in marketing programs, as well as their placement and allocation. While the aim of the Marketing Fund is to support the 360 Painting brand and increase sales, 360 Painting is not obligated to make expenditures equivalent to a franchisee's contributions or ensure direct benefits for each franchisee.
Franchisees are required to contribute to the Marketing Fund, with contributions being the greater of 2% of gross sales per week or $50 per week. These funds are used for various advertising, marketing, and promotional activities. Although all monies paid into the Marketing Fund are accounted for separately from 360 Painting's general operating revenues, the absence of a fiduciary duty means that 360 Painting has considerable latitude in how the funds are spent.
While the Marketing Fund will not be audited, 360 Painting will provide an annual report of expenditures and advertising contributions for the most recently ended fiscal year at a franchisee's request. Any surpluses in the Marketing Fund may be used in subsequent fiscal years, and 360 Painting may advance money to the fund, to be reimbursed with a reasonable interest rate. Franchisees may also be required to participate in an Advertising Council to provide advice regarding the use of the Marketing Fund; however, this council functions only in an advisory capacity and does not have authority over the fund or 360 Painting.