Can a 360 Painting franchisee request an annual report of expenditures and advertising contributions for 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, a 360 Painting franchisee can request an annual report of expenditures and advertising contributions for the Marketing Fund for the most recently ended fiscal year. This provides franchisees with a degree of transparency regarding how the marketing funds, to which they contribute, are being utilized by the company.
It's important to note that while franchisees can request this report, the Marketing Fund itself is not audited. Additionally, 360 Painting assumes no fiduciary duty in administering the Marketing Fund, meaning they have considerable discretion in how the funds are spent. The FDD states that 360 Painting intends to expend all contributions during the fiscal year in which they are received, but surpluses may be carried over to subsequent years.
This arrangement is fairly typical in franchising, where franchisors often control marketing funds and have broad discretion in their use. However, the ability to request an annual report offers franchisees some insight into the fund's activities, even without a formal audit. Franchisees should review these reports carefully to understand how their contributions are being used to support the 360 Painting brand.