Does the Baya Bar Brand Fund's earnings inure to the Franchisor's benefit?

According to Baya Bar's 2024 Franchise Disclosure Document, the Brand Fund is intended to operate solely as a conduit for advertising contributions within the Baya Bar system. The document explicitly states that the Brand Fund and its earnings shall not otherwise inure to Baya Bar's benefit. This means that the money collected for advertising and marketing purposes should be used exclusively for those purposes and not to increase the franchisor's profits.

However, the FDD does state that Baya Bar can use the Brand Fund to cover reasonable administrative costs and overhead related to managing the fund, as well as costs and expenses related to advertising activities. This includes salaries and departmental costs for advertising that Baya Bar internally administers or prepares. While this allows Baya Bar to use the fund for some internal expenses, it is limited to those directly related to the Brand Fund's operation and advertising efforts.

For a prospective franchisee, this is a positive aspect of the franchise agreement. It provides assurance that the advertising fees they contribute will be used for the intended purpose of promoting the Baya Bar brand and supporting the franchise system's marketing efforts, rather than directly benefiting the franchisor's bottom line. However, franchisees should still be aware that Baya Bar has discretion over how the Brand Fund is spent and is not obligated to ensure that each franchisee benefits directly or proportionally to their contribution.