Does Beauty Bungalows have a fiduciary duty with regard to any Multi-Area Marketing Program?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor directly collects payments from Franchisee and other franchisees in connection with a Multi-Area Marketing Program, Franchisor will use such amounts in connection with such Multi-Area Marketing Program at Franchisor's sole determination, including to reimburse Franchisor's costs and expenses incurred in administering such Multi-Area Marketing Program.
Franchisee acknowledges and agrees that a Multi-Area Marketing Program, or Franchisee's expenses or payments in connection with such Multi-Area Marketing Program, may or may not provide any benefit to Franchisee and may or may not be proportionate to expenses or payments incurred by Franchisee.
Franchisor has no fiduciary duty with regard to any Multi-Area Marketing Program.
Notwithstanding anything to the contrary in Section 9, Franchisee's combined total in a given calendar month of required expenses in connection with Multi-Area Marketing Programs and monthly contribution to the Brand Fund will not exceed two percent (2%) of Gross Revenue.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows's 2025 Franchise Disclosure Document, Beauty Bungalows does not have a fiduciary duty regarding any Multi-Area Marketing Program. This means that Beauty Bungalows is not legally obligated to act in the best interest of its franchisees when administering these programs.
The FDD states that if Beauty Bungalows directly collects payments from franchisees for a Multi-Area Marketing Program, it will use these funds at its sole discretion. This includes reimbursing Beauty Bungalows's own costs and expenses for administering the program. The document also clarifies that these programs may or may not benefit the franchisee directly or proportionately to their expenses or payments.
This arrangement carries potential risks for franchisees. Beauty Bungalows has significant leeway in how it manages and spends the funds collected for Multi-Area Marketing Programs, and franchisees have limited control over these decisions. While the combined expenses for these programs and the Brand Fund are capped at 2% of gross revenue per month, franchisees should carefully evaluate whether the potential benefits of these programs justify the costs, given that Beauty Bungalows does not owe them a fiduciary duty.