Can the Bft Franchisor use the Fund for its general operating expenses?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
- F. The Fund need not be segregated from but will be accounted for separately from Franchisor's other funds and Franchisor will not use the Fund for its general operating expenses. All taxes of any kind incurred in connection with or related to the Fund, its activities, contributions to the Fund and/or any other Fund aspect, whether imposed on Franchisor, the Fund or any other related party, will be the sole responsibility of the Fund. Franchisor will not be required to audit the Fund, but will provide an annual accounting of the Fund at the written request of Franchisee that is made 120 days after the fiscal year at issue. All interest earned on monies contributed to, or held in, the Fund will be remitted to the Fund and will be subject to the restrictions of the relevant franchise agreements.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the franchisor is restricted from using the Fund for its general operating expenses. The Fund must be accounted for separately from Bft's other funds. Taxes related to the Fund are the sole responsibility of the Fund itself.
Bft (or its affiliates) administers the Fund with advice from a Fund advisory committee (FAC) representing franchisees. The FAC advises on advertising, marketing, and public relations programs financed by the Fund. The Fund can cover costs for preparing materials and programs, advertising campaigns, employing agencies, sponsoring events, administering programs, and the costs of salaries for Bft's employees engaged in Fund administration.
Franchisees contribute 2% of their gross sales to the Fund, starting when their studio generates revenue. Bft can change the Fund contribution amount with notice. The Fund aims to maximize recognition of the Bft system and brand. However, Bft is not obligated to spend amounts equivalent to a franchisee's contribution or ensure direct benefits to a specific Bft studio from Fund expenditures. Bft can terminate the Fund, disbursing remaining funds for authorized purposes.