Does Beauty Bungalows have a fiduciary duty to franchisees regarding the Brand Fund?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
We have no fiduciary duty to you regarding the Fund or your contributions to the Fund. We have no obligation to make expenditures for franchisees in their area or territory or that are equivalent or proportionate to any individual franchisee's contribution to the Fund or ensure that any particular franchisee benefits directly or pro rata from the placement of advertising or deployment of marketing purchased with money from the Fund. If the Fund operates at a deficit or require additional funds at any time, we reserve the right to loan such funds to the Fund on any terms we determine. We are not required to use all contributions collected for the Fund in a given year, and we may retain the amount to spend on the Fund in future years. An unaudited annual financial statement of the Fund will be prepared within 120 days of the close of our fiscal year and will be available to any Franchisee upon written request.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 23–30)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, Beauty Bungalows does not have a fiduciary duty to franchisees regarding the Brand Fund. The FDD states explicitly that Beauty Bungalows has no fiduciary duty to franchisees concerning the Fund or their contributions. This means that Beauty Bungalows is not legally obligated to act in the best interests of its franchisees when managing the Brand Fund.
The Brand Fund is supported by franchisee contributions, set at a designated amount, currently 1% of Gross Revenue, but not exceeding 2% of Gross Revenue. These contributions are intended to maximize public recognition and acceptance of the Beauty Bungalows brand and increase business. Beauty Bungalows will administer these contributions at its sole discretion for marketing, advertising, and related programs.
Beauty Bungalows has the discretion to spend the contributions as it sees fit and is not obligated to make expenditures that are equivalent or proportionate to any individual franchisee's contribution, nor ensure that any particular franchisee benefits directly or pro rata from the advertising or marketing. An unaudited annual financial statement of the Fund will be prepared within 120 days of the close of Beauty Bungalows' fiscal year and will be available to any Franchisee upon written request.