Can Body20 or its affiliates make loans to the Brand Fund if the balance is negative?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
We have established and administer a Brand Fund to which you must contribute up to 4% (currently, 2%) of Gross Sales. Under no circumstances will we be deemed a fiduciary with respect to any Brand Fund Fees we receive or administer. We are not required to have an independent audit of the Brand Fund completed, but, if we elect to do so, we may use Brand Fund monies to pay for the audit. We will prepare an unaudited statement of contributions and expenditures for the Brand Fund and make it available within 60 days after the close of our fiscal year to franchisees who make a written request for a copy. If any monies in the Brand Fund remain at the end of a fiscal year, they will carry-over in the Brand Fund into the next fiscal year. We or one of our affiliates may make or otherwise arrange loans to the Brand Fund in any year in which the balance of the Brand Fund is negative and charge a reasonable rate of interest. The amounts loaned to the Brand Fund will be repaid from future contributions to the Brand Fund in the year the loan is made or in subsequent years.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 38–49)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, Body20 or its affiliates have the option to provide loans to the Brand Fund if its balance is negative. If a loan is made, Body20 can charge a reasonable rate of interest on the loan.
The funds loaned to the Brand Fund will be repaid through future contributions to the fund, either in the year the loan was issued or in subsequent years. This arrangement ensures that the Brand Fund can continue to operate even if there's a temporary shortfall in contributions.
For a prospective Body20 franchisee, this means that the Brand Fund, which is used for marketing and promotional activities, should remain solvent even if there are fluctuations in income. The franchisee can expect that Body20 has a mechanism in place to ensure the Brand Fund can continue to support the brand's marketing efforts. However, franchisees should be aware that these loans, including any accrued interest, will be repaid from future franchisee contributions to the Brand Fund.