Is the Body20 franchisor obligated to spend the Brand Fund Fee on advertising?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
orm for all franchisees and must be paid in a lump sum.
ITEM 6 OTHER FEES
OTHER FEES (Note 1)
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee (2) | 8% of the Gross Sales of the Studio. | Currently due weekly by the 5th of each month (the "Payment Due Date") | See Note 2 for the definition of Gross Sales. |
| Brand Fund Fee | Currently, 2% of Gross Sales of the Studio. | The Payment Due Date | We have established and administer a Brand Fund and require you to contribute the Brand Fund Fee. We may increase the fee up to 4% of the Gross Sales of the Studio. See Note 2 for the definition of Gross Sales. |
| Marketing Spending Requirement | $1,500 per month | The Payment Due Date | You must spend the Marketing Spending Requirement on local advertising and promotional activities. Alternatively, we may require you to pay us the Marketing Spending Requirement, which we will use to conduct local advertising and p |
Source: Item 6 — OTHER FEES (FDD pages 19–26)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, franchisees are required to pay a Brand Fund Fee, which is currently 2% of the Studio's Gross Sales. This fee contributes to the Brand Fund, which Body20 administers. The FDD states that Body20 may increase this fee up to 4% of Gross Sales. However, the document does not explicitly state that Body20 is obligated to spend the Brand Fund Fee specifically on advertising.
In addition to the Brand Fund Fee, Body20 franchisees must also meet a Marketing Spending Requirement of $1,500 per month. This amount is intended for local advertising and promotional activities. Franchisees have the option to either manage these local advertising efforts themselves or pay the $1,500 to Body20, which will then handle the local advertising on the franchisee's behalf, using their discretion in how the funds are spent.
While the FDD specifies the Brand Fund Fee and the Marketing Spending Requirement, it lacks detail on how the Brand Fund is actually used. A prospective Body20 franchisee should seek clarification from the franchisor regarding the specific allocation of the Brand Fund, including what percentage is dedicated to advertising versus other brand-building activities. Understanding the franchisor's plans for the Brand Fund is crucial for evaluating the potential return on investment for these fees.