Is Bhc required to maintain the Marketing and Promotion Fees in a separate account?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
We will either transfer such Marketing and Promotion Fee to a separate entity to which we have delegated the responsibility to operate and maintain it or administratively segregate on our books and records the fees we receive from franchisees ("Fund").
However, we are not required to maintain the fees paid by you or other franchises to the Fund and income earned by the Fund in a separate account.
- (x) We may not use this money principally to solicit new franchise sales for any purposes other than those provided for in the MFA.
We may include information regarding acquiring a franchise on or as a part of materials and items produced by or for the Marketing and Promotion Fee.
- (xi) We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Marketing and Promotion Fee in that year and may cause it to borrow funds to cover deficits or invest in surplus funds.
If we spend less than the total of all contributions to the fund during any fiscal year, we may accumulate those sums for use in later years.
If we or an affiliate advances money to the Fund beyond what it contributes on account of our company or affiliate-owned BHC Restaurant, we will be entitled to reimbursement.
Any interest earned on monies held in the Fund may be retained by us for our own use, in our discretion.
- (xii) Although we intend the Fund to be perpetual, we can terminate the Fund for the Marketing and Promotion Fee.
We will not terminate the Fund until it has spent all money in the fund for advertising and promotional purposes.
- (xiii) In 2024, we neither collected nor expended any Marketing and Promotion Fees.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, And Training (FDD pages 29–38)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc is not required to maintain the Marketing and Promotion Fees in a separate account. While Bhc may transfer the Marketing and Promotion Fee to a separate entity or administratively segregate the fees, it is not mandated to keep these funds in a separate account. This means that the fees paid by franchisees, along with any income earned by the fund, do not necessarily need to be held in an account distinct from Bhc's other funds.
Bhc has the discretion to use any interest earned on the monies held in the Fund for its own purposes. Additionally, Bhc can terminate the Fund for the Marketing and Promotion Fee, provided that all money in the fund has been spent for advertising and promotional purposes. In 2024, Bhc neither collected nor expended any Marketing and Promotion Fees.
This arrangement gives Bhc considerable flexibility in managing the Marketing and Promotion Fees. However, it also means that franchisees have less direct control over how their contributions are managed and invested. Prospective franchisees should consider this when evaluating the franchise opportunity and may want to inquire about Bhc's historical practices regarding the use of these funds.