If there are surpluses in the 360 Painting Marketing Fund, what happens to them?
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 360 Painting Franchise Disclosure Document, any surpluses in the Marketing Fund may be used in subsequent fiscal years. 360 Painting anticipates that all contributions to the Marketing Fund will be spent during the fiscal year they are received. However, the FDD clarifies that any surplus funds are not returned to franchisees but can be carried over and spent in future years. This is a fairly common practice in franchising, allowing franchisors to accumulate funds for larger, strategic marketing initiatives.
360 Painting franchisees are required to contribute to the Marketing Fund, with the contribution being the greater of 2% of gross sales per week or $50 per week. These contributions are used at 360 Painting's discretion for advertising, marketing, and promotional programs designed to enhance the 360 Painting system. The FDD states that the Marketing Fund is not a trust, and 360 Painting assumes no fiduciary duty in administering it.
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. This provides some transparency into how the funds are being used, even though franchisees do not have direct control over the fund's administration. Franchisees should consider the implications of contributing to a marketing fund where surpluses are retained and reinvested at the franchisor's discretion.