Does Better Blend Franchising (BBF) act as a fiduciary of the Better Blend franchisee?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
The Marketing Fund will be spent at BBF's sole discretion, and BBF has no fiduciary duty with regard to the Marketing Fund.
- (d) Contribution by Other Outlets.
BBF is not obligated to (i) have all other Better Blend businesses (whether owned by other franchisees or by BBF or its affiliates) contribute to the Marketing Fund, or (ii) have other Better Blend businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as Franchisee.
- (e) Surplus or Deficit.
BBF may accumulate funds in the Marketing Fund and carry the balance over to subsequent years.
If the Marketing Fund operates at a deficit or requires additional funds at any time, BBF may loan such funds to the Marketing Fund on reasonable terms.
- (f) Financial Statement.
BBF shall prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of BBF's fiscal year and shall provide the financial statement to Franchisee upon written request.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Better Blend Franchising (BBF) does not have a fiduciary duty regarding the Marketing Fund. The FDD states that the Marketing Fund will be spent at BBF's sole discretion.
This means that Better Blend has the authority to make decisions about how the Marketing Fund is used without being legally obligated to prioritize the franchisee's best interests above its own. This is a significant point for potential franchisees to consider, as the Marketing Fund is intended to benefit the entire Better Blend system.
While Better Blend is not obligated to have all Better Blend businesses contribute to the Marketing Fund, or contribute the same amount, they are required to prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of BBF's fiscal year and shall provide the financial statement to Franchisee upon written request. This provides some transparency to franchisees regarding the fund's financials, even without a fiduciary duty in place.