Must compensation paid by the Bft Fund to the franchisor or its affiliates be reasonable?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor, its affiliates, and/or their respective employees, agents, contractors, and designated vendors can provide goods, services, materials, etc. (including administrative services and/or in-house advertising agency services) and be compensated and/or reimbursed for the same by the Fund, provided that any such compensation must be reasonable in amount.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the compensation paid to the franchisor, its affiliates, and their respective personnel for providing goods, services, materials, etc., from the Bft Fund must be reasonable in amount. This includes compensation or reimbursement for administrative services and/or in-house advertising agency services.
This means that while Bft and its affiliates can be compensated from the fund, there is a stipulation that these costs must be reasonable. This provision aims to protect franchisees by ensuring that the franchisor does not excessively profit from the fund at the expense of advertising and promoting the Bft system.
As a prospective franchisee, it would be prudent to understand how 'reasonable' is defined and enforced in practice. Requesting detailed breakdowns of how the fund is used, and how compensation to the franchisor and its affiliates is determined, can provide greater clarity and assurance. Furthermore, understanding the role and influence of the Fund Advisory Committee (FAC) in overseeing fund expenditures can offer additional insight into the fund's management and transparency.