Can Body20 charge interest on loans made to the Brand Fund?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
Brand Fund. 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 one of its affiliates may provide loans to the Brand Fund if the fund's balance is negative. If Body20 or its affiliates provide a loan to the Brand Fund, Body20 can charge a reasonable rate of interest on the loan.
The amounts loaned to the Brand Fund, including interest, will be repaid from future contributions to the Brand Fund. These repayments can occur in the same year the loan was made or in subsequent years. This means that franchisee contributions to the Brand Fund could be used to repay these loans and interest.
As a prospective franchisee, it is important to understand how the Brand Fund is managed and how loans to the fund could impact the allocation of your contributions. You may want to ask Body20 for more details on the circumstances under which loans are made to the Brand Fund, the typical interest rates charged, and the repayment schedule to fully understand the financial implications.