Is the franchisor obligated to make expenditures for a Beggars Pizza franchisee that are equivalent to their contributions?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as described above, neither we nor our affiliates receive payment for providing goods or services to the Brand Fund. We or our affiliate are not obligated by our administration of the Brand Fund to make expenditures for you that are equivalent or proportionate to your contributions, or to ensure that any particular franchisee benefits directly or on a pro rata basis from the expenditures or activities of the Brand Fund. (Franchise Agreement, Section 12.5.1.)
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 19–26)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, Beggars Pizza or its affiliates are not obligated to make expenditures for a franchisee that are equivalent or proportionate to the franchisee's contributions to the Brand Fund. Nor are they required to ensure that any particular franchisee benefits directly or on a pro rata basis from the expenditures or activities of the Brand Fund.
Beggars Pizza franchisees must pay a weekly fee of 1% of their gross sales to the Brand Fund. These contributions are in addition to required grand opening and local advertising expenses. Beggars Pizza restaurants owned and operated by Beggars Pizza or its affiliates currently contribute to the Brand Fund in the same manner and at the same rates as franchised Beggars Pizza restaurants, but they are not required to do so.
A reasonable amount of the Brand Fund fees paid by all franchisees may be used to cover Beggars Pizza's or its affiliate's costs and overhead as may be incurred from activities reasonably related to the direction and implementation of the Brand Fund and advertising programs for franchisees and the System including costs and salaries of personnel for creating and implementing advertising, promotional, and marketing programs, accounting expenses, and other out-of-pocket expenses paid to third parties.
Beggars Pizza anticipates that all contributions to the Brand Fund will be expended for their intended purposes during the fiscal year in which the contributions are made. To the extent any contributions are not expended by the end of the applicable fiscal year, they will be expended no later than the end of the taxable year following the year of receipt. Although Beggars Pizza intends that the Brand Fund will be of perpetual duration, Beggars Pizza and its affiliates may terminate the Brand Fund in their discretion; however, the Brand Fund may not be terminated until all monies in the Brand Fund have been expended for advertising and/or promotional purposes or returned to contributors on the basis of their respective contributions.