Does Boulder Designs have a fiduciary obligation for administering the Marketing Fee?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
The Marketing Fee is not a trust or escrow, and neither we nor our affiliates have any fiduciary obligation for administering the Marketing Fee or for any other reason.
The parties acknowledge that Franchisor owns all rights, and retains all copyrights, in all design and content developed using Marketing Fee monies, and that Franchisor will have sole control over the creative concepts, content, form, and media placement of all advertising and promotional materials developed with these monies, and the allocations of Marketing Fee monies to production, placement and other costs. Franchisor will own all copyright in any works created using Marketing Fee monies. Franchisee acknowledges and agrees that Franchisor is not obligated to expend Marketing Fees for placement of advertising in Franchisee's Territory, or to ensure that the Franchised Business benefits directly or pro rata from the expenditure of Marketing Fees. Franchisor has no fiduciary duty to Franchisee or to any other person with respect to the collection or expenditure of Marketing Fees.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, Boulder Designs does not have a fiduciary obligation for administering the Marketing Fee. The FDD states clearly that the Marketing Fee is not considered a trust or escrow account. This means that Boulder Designs is not legally bound to act in the franchisees' best interests when managing these funds.
Boulder Designs has the discretion to use the Marketing Fee monies for various marketing and advertising purposes. These include creative development, market studies, providing marketing services, developing advertising materials, updating their website, obtaining sponsorships, and even covering their own administrative costs related to these activities. This wide latitude in how the funds are used gives Boulder Designs significant control over the marketing direction of the franchise system.
This arrangement carries potential implications for franchisees. Boulder Designs is not obligated to spend Marketing Fees specifically in a franchisee's territory or ensure that a franchisee benefits directly or proportionally from these expenditures. Therefore, franchisees may not have direct influence over how the marketing funds are spent and may not see immediate returns in their specific location. Prospective franchisees should carefully consider this aspect and discuss with Boulder Designs how marketing strategies are developed and implemented to support individual franchise growth.