Are Anago franchisees considered third-party beneficiaries of the advertising fund?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor does not owe any fiduciary obligation to Subfranchisor or Unit Franchisees for administering the Fund or any other reason.
Franchisor undertakes no obligation to make expenditures for Subfranchisor or any individual Unit Franchisee which are equivalent or proportionate to contributions paid under this Agreement, or to insure that Subfranchisor or any unit Franchisee benefits directly or on a pro-rata basis from activities of the Fund, if any.
SECTION 7.2 ADVERTISING FUND.
We have established an advertising and marketing fund for Anago Unit Franchises (the "Fund"). We and/or AFI will have the sole discretion over the concepts, materials, media, type, nature, scope, frequency, place, form, copy, layout and content of all national, regional and local advertising paid out of the Fund. The Fund will be maintained and administered by Us, AFI, or Our Designee as follows:
- (a) The Fund is intended to maximize general public recognition and acceptance of the Anago trademarks and System for the benefit of all Franchisees within the System, and neither We, nor AFI is obligated to make expenditures for You which are equivalent or proportionate to Your contribution or to ensure that You benefit directly or pro-rata from the placement of advertising or marketing.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the franchisor does not owe any fiduciary obligation to the subfranchisor or unit franchisees for administering the advertising fund or for any other reason. Anago or AFI is not obligated to make expenditures for the franchisee that are equivalent or proportionate to the franchisee's contribution or to ensure that the franchisee benefits directly or pro-rata from the placement of advertising or marketing. The advertising fund is intended to maximize general public recognition and acceptance of the Anago trademarks and System for the benefit of all Franchisees within the System.
This means that while franchisees contribute to the advertising fund, they are not guaranteed to receive direct or proportionate benefits from the advertising and marketing efforts. The franchisor has sole discretion over the advertising content, media, and targeted areas. The franchisor decides how the fund is spent to enhance the Anago system's public reputation.
For a prospective Anago franchisee, this implies that contributing to the advertising fund does not guarantee specific local advertising or a direct return on investment. The franchisee relies on the franchisor's judgment in administering the fund for the overall benefit of the Anago system. It is important for potential franchisees to understand that the fund is not a trust and the franchisor does not have a fiduciary duty to individual franchisees in administering the fund.