Is Bang Cookies required to segregate the Brand Development Fund from its general operating funds?

According to Bang Cookies's 2024 Franchise Disclosure Document, Bang Cookies is not required to segregate the Brand Development Fund from its general operating funds. This means that the money collected for the Brand Development Fund, which can be up to 2% of a franchisee's weekly gross sales, is not kept in a separate account. Instead, it can be co-mingled with Bang Cookies's other operating funds.

This arrangement has potential implications for franchisees. While Bang Cookies must provide an unaudited accounting of how the Brand Development Fund monies are spent annually, the lack of segregation could make it more difficult to track the funds and ensure they are used solely for the purposes outlined in the FDD, such as market studies, advertising, and public relations.

Additionally, Bang Cookies states that it is not a fiduciary or trustee of the Brand Development Fund. This means Bang Cookies does not have a legal obligation to act in the best interest of the franchisees when managing the fund. This differs from some franchise systems where the franchisor has a fiduciary duty to the franchisees regarding the advertising fund. Prospective franchisees should carefully consider this aspect and seek clarification from Bang Cookies regarding the oversight and management of the Brand Development Fund.