Does Bens Soft Pretzels have a fiduciary obligation to franchisees regarding the Advertising Fund?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right to designate local advertising markets and if designated, you must participate in and contribute to the cooperative advertising and marketing programs in your designated local advertising market.
If established, you must contribute to the advertising cooperative the amount designated by the cooperative.
Each BEN'S SOFT PRETZELS store, including those operated by us or our affiliates within a designated local advertising area (except Special Sites) is a member of the local advertising cooperative and each store has one vote on all matters requiring a vote.
Each advertising cooperative will be required to adopt governing bylaws that meet our approval.
You must obtain our written approval of all promotional and advertising materials, creative execution and media schedules prior to their implementation.
Each advertising cooperative will be required to prepare annual financial statements, which must be made available to all members of the cooperative and to us upon request.
Also, each advertising cooperative must submit to us its meeting minutes upon our request. We have the right to require advertising cooperatives to be formed, changed, dissolved or merged.
Source: Item 22 — CONTRACTS (FDD pages 46–47)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Bens Soft Pretzels addresses advertising cooperatives but does not explicitly state whether Bens Soft Pretzels has a fiduciary duty regarding these funds. However, the document does state that franchisees may be required to participate in local advertising cooperatives if designated and contribute the amount specified by the cooperative. Each Bens Soft Pretzels store, including those operated by the company or its affiliates (excluding Special Sites), is a member of the local advertising cooperative and has one vote on matters requiring a vote.
According to the FDD, each advertising cooperative must adopt governing bylaws that meet Bens Soft Pretzels' approval. Franchisees must obtain written approval from Bens Soft Pretzels for all promotional and advertising materials, creative execution, and media schedules before implementation. Each advertising cooperative is required to prepare annual financial statements, which must be available to all members and to Bens Soft Pretzels upon request. Additionally, cooperatives must submit meeting minutes to Bens Soft Pretzels upon request, and Bens Soft Pretzels retains the right to form, change, dissolve, or merge advertising cooperatives.
While the FDD outlines the structure, governance, and financial reporting requirements for advertising cooperatives, it does not explicitly define a fiduciary duty of Bens Soft Pretzels to franchisees concerning these advertising funds. A prospective franchisee should seek clarification from Bens Soft Pretzels regarding whether the company has a fiduciary duty concerning the advertising funds and what legal standards apply to the administration and use of those funds.