Is Body20 considered a fiduciary with respect to the Brand Fund Fees they receive or administer?
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 explicitly states that it will not be deemed a fiduciary regarding the Brand Fund fees it receives or administers. Franchisees are required to contribute up to 4% of Gross Sales to the Brand Fund, with the current contribution being 2%.
Body20 is not obligated to conduct an independent audit of the Brand Fund. However, if they choose to do so, they can use the Brand Fund's money to cover the audit expenses. Body20 will provide an unaudited statement of contributions and expenditures for the Brand Fund within 60 days after the close of their fiscal year, but only to franchisees who request it in writing. Any remaining funds in the Brand Fund at the end of the fiscal year will be carried over to the next fiscal year.
Body20 or its affiliates have the option to provide loans to the Brand Fund if the balance is negative, charging a reasonable interest rate. These loans will be repaid from future contributions to the Brand Fund. This arrangement gives Body20 significant control over the Brand Fund, without the legal responsibilities of a fiduciary, which typically requires acting in the best interests of another party. This is a common practice in franchising, where franchisors often maintain control over marketing funds.