Under what conditions might Best Western contribute a discretionary amount, up to 6% of employees' eligible compensation, to the 401(k) investment plan or the Canadian Registered Retirement Savings Plan (RRSP)?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company sponsors a 401(k) investment plan which is available to all U.S. employees on the first day of service, and a Canadian Registered Retirement Savings Plan (the "RRSP") which is available to all Canadian employees on the first day of service. Under the plans, employees may contribute a percentage of their eligible wages to the plans, subject to maximum statutory regulations. The Company contributes 3% of the annual salary of all eligible employees to these plans.
The Company may also contribute a discretionary amount, as determined by the Board of Directors, up to 6% of employees' eligible compensation, to be allocated in proportion to the employees' contributions provided an employee has worked 1,000 hours during the plan year and is employed on the last day of the plan year.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, the company sponsors a 401(k) investment plan for U.S. employees and a Canadian Registered Retirement Savings Plan (RRSP) for Canadian employees, both available from the first day of service. Employees can contribute a percentage of their eligible wages to these plans, subject to statutory regulations. Best Western automatically contributes 3% of each eligible employee's annual salary to these plans.
In addition to the guaranteed 3% contribution, Best Western may also contribute a discretionary amount, as determined by its Board of Directors. This discretionary contribution can be up to 6% of an employee's eligible compensation. However, this additional contribution is allocated in proportion to the employees' contributions, meaning the more an employee contributes, the more they could potentially receive from Best Western, up to the 6% limit.
To be eligible for this discretionary contribution, an employee must meet two specific criteria. First, the employee must have worked at least 1,000 hours during the plan year. Second, the employee must still be employed by Best Western on the last day of the plan year. Meeting both these conditions ensures that employees who receive the discretionary contribution have demonstrated a significant commitment to the company throughout the year.