Does Baymont Inn Suites manage the marketing fund in a fiduciary capacity?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The System Assessment Fees are not held in trust and we do not manage the Fund in a fiduciary capacity, although its funds are separately accounted for on our books. We administer and apply the Fund at our discretion. We are not required to, nor do we, have the Fund audited. We do not provide reporting to you or other members about its finances. Any monies which remain in the Fund at the end of the year (or deficiencies where the amount spent for marketing exceeds the contributions collected for the year) are carried over into the following year. The Fund may be used to compensate us or an affiliate for any administrative or other services, such as reasonable expenses incurred for accounting, collection, data processing, computer services, bookkeeping, reporting, system maintenance, and legal services that we or the affiliate provide to the Fund to support marketing activities, the CRS, and for our out-of-pocket costs. In addition, we or an affiliate may provide products or services to the Fund. We may earn a profit on these activities, products, and services. However, they will be provided at a cost comparable to the cost that the Fund would otherwise incur if the products or services were obtained from unaffiliated third parties. In 2024, Fund expenditures were used as follows: 20.5% for media placement (including electronic marketing); 0.7% for production; 22.2% for administration; and 56.6% for other expenses (e.g., public relations, guest services, group and corporate sales, field services, and training). In 2024, no portion of the Fund was utilized principally to solicit the sale of new franchises.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 61–74)
What This Means (2025 FDD)
According to the 2025 Baymont Inn Suites FDD, the company does not manage the System Assessment Fees, which are deposited into a marketing fund, in a fiduciary capacity. Although the funds are separately accounted for on their books, Baymont Inn Suites administers and applies the fund at its discretion. This means that Baymont Inn Suites has considerable control over how the marketing funds are spent.
Baymont Inn Suites is not required to have the fund audited and does not provide financial reporting to franchisees about the fund's finances. Any remaining monies or deficiencies are carried over into the following year. The fund may be used to compensate Baymont Inn Suites or its affiliates for administrative or other services, such as accounting, data processing, and legal services. They may also earn a profit on products or services provided to the fund, as long as the cost is comparable to what unaffiliated third parties would charge.
In 2024, Baymont Inn Suites allocated the fund expenditures as follows: 20.5% for media placement (including electronic marketing), 0.7% for production, 22.2% for administration, and 56.6% for other expenses like public relations, guest services, and training. None of the fund was used to solicit the sale of new franchises. This information is useful for a prospective franchisee to understand how their System Assessment Fees are utilized, and the lack of fiduciary responsibility means franchisees have less direct control or oversight over these marketing expenditures.