Is the Anago advertising fund considered an asset of AFI?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right to establish national and/or regional advertising funds and/or regional advertising cooperatives (hereinafter collectively referred to as the "Fund") for the common benefit of the Anago franchise System. If a Fund is established, we may require you to contribute a monthly amount not to exceed 2.2% of your Gross Revenues during the preceding month to the Fund. If established, your payments to the Fund shall be used for advertising, marketing, promotion, production and development of advertising, marketing, promotional and other programs, product development, merchandising, public relations, administrative expenses, programs designed to increase business and enhance and further the public reputation of the Anago franchise System, and activities related to any or all of the foregoing. The content of all activities of the Fund, including, without limitation, the media selected and employed, as well as the area and units to be targeted for such activities shall be at our sole discretion. We undertake no obligation to make expenditures for you or any individual Unit Franchisee which are equivalent or proportionate to contributions paid to the Fund, or to insure that you or any Unit Franchisee benefits directly or on a pro-rata basis from activities of the Fund, if any. We have the right to include a notation on all advertisements stating the availability of franchise and/or career opportunities. The Fund is not an asset of AFI. AFI does not owe any fiduciary obligation to Subfranchisors or Unit Franchisees for administering the Fund or any other reason. The Fund is not required to be audited. However, a statement of operations of the Fund, if developed, will be prepared annually by an independent public accountant selected by us. Upon reasonable request, we will provide you a copy of the annual statement of operations. Payments to the Fund may be utilized to provide for the administrative expenses of the Fund, including, without limitation, salaries, travel, rent and other expenses of administering the Fund, and for programs designed to increase sales and enhance and further develop the public reputation and image of Anago and the Anago franchise System. The balance, including any interest earned by the Fund, will be used for advertising and related expenses. Fund contributions not spent in the fiscal year in which they accrue will typically be carried forward to the next year and spent on advertising
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the advertising fund is not considered an asset of AFI. The document specifies that AFI does not have any fiduciary obligation to Subfranchisors or Unit Franchisees for administering the fund or for any other reason. This means that Anago franchisees do not have a claim to the funds.
The advertising fund, if established, is intended for the common benefit of the Anago franchise system. Contributions to the fund, which may not exceed 2.2% of a franchisee's gross revenues, are used for advertising, marketing, promotion, product development, public relations, and administrative expenses. Anago retains sole discretion over the content and activities of the fund, including the selection of media and targeted areas.
Anago does not guarantee that expenditures from the fund will be equivalent or proportionate to individual franchisee contributions, nor does it ensure direct benefits to each franchisee on a pro-rata basis. While the fund is not required to be audited, Anago will provide a statement of operations prepared by an independent public accountant upon reasonable request. This provides some level of transparency, even though a full audit is not mandated.
As of the issuance date of the 2025 Disclosure Document, there is no advertising fund in effect. However, Anago retains the right to establish one in the future. If a fund is developed, businesses owned by Anago and its affiliates will also be required to contribute. This ensures that Anago's corporate-owned locations are also invested in the advertising efforts.