How does Body20 manage 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.
We may use monies in the Brand Fund and any earnings on the Brand Fund account for any costs associated with advertising (media and production), branding, marketing, public relations and/or promotional programs and materials, and any other activities we determine, in our sole discretion, would benefit the Brand or the Studios generally. These activities may include, but are not limited to: (i) advertising campaigns in various media; (ii) creation, maintenance, and optimization of the System Website or other websites; (iii) keyword or adword purchasing programs; (iv) conducting and managing social media activities; (v) direct mail advertising; (vi) market research, including secret shoppers and customer satisfaction surveys; (vii) branding studies; (viii) engaging advertising and/or public relations agencies and paying any related retainers and fees; (ix) paying the salaries and benefits of our marketing and brand-building personnel and any other overhead related to our marketing department; (x) purchasing promotional items; (xi) conducting and administering promotions, contests, giveaways, public relations events, and community involvement activities; (xii) marketing the sale of Franchises; (xiii) providing promotional and other marketing materials and services to our franchisees; and (xiv) reasonable administrative costs and overhead we incur related to the administration of the Brand Fund and the implementation of Brand Fund-supported programs.
We may consult with, in our sole discretion, a franchisee advisory council selected by franchisees or a committee of franchisees that we appoint regarding marketing programs. However, we have the right to direct all marketing programs and uses of the Brand Fund, with the final decision over creative concepts, materials, and media used in the programs and their placement.
We do not guarantee that you will benefit from the Brand Fund in proportion to your contributions to the Brand Fund.
We will make any sales and other materials produced with Brand Fund monies available to you without charge or at a reasonable cost, and we will deposit the proceeds of such sales into the Brand Fund.
If we or our affiliates operate any Studios, we or our affiliates will contribute to the Brand Fund a percentage of the receipts of those Studios, on the same basis as required for franchisees. If we reduce the Brand Fund contribution rate for franchisees, we will reduce the contribution rate for company or affiliate-owned Studios by the same amount. Our other franchisees may not be required to contribute to the Brand Fund, may be required to contribute to the Brand Fund at a different rate than you, or may be required to contribute to a different Brand Fund.
In fiscal year 2024, Brand Fund expenditures by Predecessor were allocated as follows: 61.46% on production; 18.5% on administrative expenses; and 20.04% on media placement.
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 has established a Brand Fund that franchisees must contribute up to 4% of Gross Sales to; currently, the contribution is 2%. Body20 states that it is not considered a fiduciary with respect to the Brand Fund fees. While an independent audit of the Brand Fund is not required, Body20 may elect to have one completed and use Brand Fund monies to pay for it. Body20 will prepare an unaudited statement of contributions and expenditures for the Brand Fund, available within 60 days after the close of their fiscal year to franchisees who request it in writing. Any remaining funds at the end of the fiscal year will carry over to the next fiscal year. Body20 or its affiliates can loan money to the Brand Fund if the balance is negative, charging a reasonable interest rate, with repayment from future contributions.
Body20 may use the Brand Fund for advertising, branding, marketing, public relations, promotional programs, and any other activities they deem beneficial to the Brand or Studios. These activities include advertising campaigns, website creation and maintenance, keyword purchasing programs, social media activities, direct mail advertising, market research, branding studies, engaging advertising agencies, paying marketing personnel salaries, purchasing promotional items, conducting promotions, and covering administrative costs.
Body20 may consult with a franchisee advisory council or a committee of franchisees regarding marketing programs but retains the right to direct all marketing programs and uses of the Brand Fund, including final decisions on creative concepts, materials, and media. Body20 does not guarantee that franchisees will benefit from the Brand Fund in proportion to their contributions. Sales and other materials produced with Brand Fund monies will be available to franchisees at no charge or at a reasonable cost, with proceeds deposited back into the Brand Fund. If Body20 or its affiliates operate Studios, they will contribute to the Brand Fund on the same basis as franchisees.
In fiscal year 2024, Brand Fund expenditures were allocated as follows: 61.46% on production, 18.5% on administrative expenses, and 20.04% on media placement. Franchisees are also required to spend at least $1,500 per month on local advertising and promotional activities, in addition to the Brand Fund Fee. This local marketing requirement is separate from the Brand Fund contributions and provides Body20 with the option to manage local advertising on behalf of the franchisee if they fail to meet the spending requirement.