Can Bft borrow from affiliates to cover deficits of the Fund?

According to Bft's 2025 Franchise Disclosure Document, Bft (or its affiliates) has the right to borrow from its affiliates (or Bft itself) or other lenders to cover any deficits that the advertising fund may incur. This means that if the contributions to the fund in a given year are not sufficient to cover the planned advertising and marketing expenses, Bft can take out loans to ensure that these activities can continue.

This ability to borrow funds provides Bft with flexibility in managing the advertising fund and ensures consistent marketing efforts, even if there are fluctuations in franchisee contributions or unexpected expenses. However, it also introduces a layer of financial complexity and potential risk. While the FDD states that Bft can borrow to cover deficits, it does not specify the terms or conditions of such borrowing, such as interest rates, repayment schedules, or any limitations on the amount that can be borrowed.

For a prospective Bft franchisee, this clause highlights the importance of understanding how the advertising fund is managed and the potential implications of Bft's ability to borrow on its behalf. It would be prudent to inquire about the fund's historical performance, any instances where borrowing has occurred, and the policies governing such borrowing to fully assess the financial risks and benefits associated with the advertising fund. Understanding these aspects will allow a franchisee to make a more informed decision about investing in a Bft franchise.