Is the Bft advertising fund considered a trust or escrow account?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
The Fund is not a trust or escrow account, and we have no fiduciary obligations regarding the Fund. We are not required to audit the Fund, but we may retain independent certified public accountants to prepare an annual audit of the Fund, at the expense of the Fund. We will provide a copy of the annual accounting of the Fund to franchisees upon written request. Our company-owned or affiliate-owned Studios, if and when operating, are not required to contribute to the Fund at the same rate as franchisees. As of the date of this Disclosure Document, all franchisees that contribute to the Fund may not contribute at the same rate as you. Should the Fund Contribution for the System decrease at any time, we have the right to reduce our contribution from company-owned or affiliate-owned Studios to the rate specified for franchised locations.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 37–50)
What This Means (2025 FDD)
According to the 2025 Bft Franchise Disclosure Document, the Brand Development Fund is not a trust or escrow account. Bft explicitly states that they have no fiduciary obligations regarding the Fund. This means that Bft has considerable discretion in how the fund is managed and spent.
Bft is not required to audit the Fund, although they may choose to retain independent certified public accountants to conduct an annual audit at the Fund's expense. Franchisees are entitled to receive a copy of the annual accounting of the Fund upon written request. This provides some level of transparency, allowing franchisees to review how the funds are being utilized.
Company-owned or affiliate-owned Bft studios are not required to contribute to the Fund at the same rate as franchisees, and contributing franchisees may also have varying contribution rates. Bft retains the right to reduce its contribution from company-owned or affiliate-owned studios if the contribution rate for the system decreases. For prospective franchisees, this highlights the importance of understanding the potential uses of the fund and requesting the annual accounting to assess how contributions are being allocated.