Is the Bath Tune Up National Advertising Fund a trust or escrow account?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
The Fund is not a trust or escrow account, and Franchisor has no fiduciary obligation to Franchisee, or to any franchisees, with respect to the Fund.
Franchisor has the absolute right to direct the creative concepts, materials, endorsements and media used in the advertising and public relations programs, as well as the placement and allocation of the programs.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, the National Advertising Fund is not a trust or escrow account. This means that Bath Tune Up is not legally obligated to manage the fund with the same level of fiduciary responsibility that would be required for a trust or escrow account. The franchisor has the right to direct the advertising and public relations programs, including the creative concepts, materials, and media used.
Bath Tune Up franchisees contribute to the National Advertising Fund, with payments that are not refundable. The funds are used for national, regional, local, and other advertising and public relations programs deemed necessary by the franchisor. These programs aim to promote and protect the Bath Tune Up system. The franchisor will account for the fund separately from its other funds, but can use it to cover reasonable salaries related to advertising and promotional programs, as well as an administrative fee of 15% of the annual aggregate National Advertising Fees received.
Any remaining funds at the end of the fiscal year will carry over to the next fiscal year. Bath Tune Up emphasizes that the fund is intended to maximize general public recognition and patronage for the benefit of the entire system, and individual franchisees may not directly or proportionally benefit from specific advertising placements. The fund cannot be used for initiatives solely intended to market the sale of franchises, though activities like website maintenance and public relations may include information about franchising opportunities.
Given that the National Advertising Fund is not a trust or escrow account, prospective Bath Tune Up franchisees should carefully consider the franchisor's discretion in managing and allocating these funds. It is important to understand how the franchisor plans to use the funds to support the system and whether those plans align with the franchisee's expectations for marketing and advertising support.