Is the Buff City Soap Brand Fund accounted for separately from the Franchisor's other funds?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Accounting.
The Brand Fund will be accounted for separately from Franchisor's other funds and will not be used to defray any of Franchisor's general operating expenses, except for such reasonable salaries, administrative costs, travel expenses, and overhead as Franchisor may incur in activities related to the administration of the Brand Fund and its programs, including as described in Section 10(a) and with respect to collecting and accounting for contributions to the Brand Fund.
The Brand Fund is operated solely as a conduit for collecting and expending the Brand Fund Contributions described in Section 4(c).
Franchisor does not act as trustee with respect to the Brand Fund and has no fiduciary duty to Franchisee or its Affiliates, Principals or any other franchisees with regard to the operation or administration of the Brand Fund.
Franchisor may spend, on behalf of the Brand Fund, in any fiscal year, an amount that is greater or less than the aggregate contribution of all Makeries to the Brand Fund in that year, and the Brand Fund may borrow from Franchisor or others to cover deficits or may invest any surplus for future use.
All Interest earned on monies contributed to the Brand Fund will be used to pay advertising costs before other assets of the Brand Fund are expended.
Franchisor will, upon Franchisee's written request (but no more than once annually) provide a copy of its unaudited annual statement of monies collected and costs incurred by the Brand Fund.
Franchisor will have the right to cause the Brand Fund to be incorporated or operated through a separate entity at such time as Franchisor deems appropriate, and such successor entity will have all of the rights and duties specified herein.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, the Brand Fund will be accounted for separately from Buff City Soap's other funds. However, the Brand Fund can be used to cover reasonable salaries, administrative costs, travel expenses, and overhead that Buff City Soap incurs while administering the Brand Fund and its related programs. This includes costs related to collecting and accounting for contributions to the Brand Fund.
This means that while the Brand Fund is maintained separately for accounting purposes, Buff City Soap can use it to cover certain internal expenses related to managing the fund. This is a fairly standard practice in franchising, as managing a brand fund involves administrative work and associated costs.
It is important to note that the Brand Fund is operated as a conduit for collecting and expending contributions, and Buff City Soap does not act as a trustee or have a fiduciary duty to franchisees regarding the fund's operation. Buff City Soap can also spend more or less than the aggregate contributions in any fiscal year and may borrow or invest surplus funds. Franchisees are entitled to receive a copy of the unaudited annual statement of monies collected and costs incurred by the Brand Fund, upon written request, but no more than once annually.