Is the Franchisor liable to the franchisee regarding the Brand Fund for Buff City Soap?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as expressly provided in this Section 10, Franchisor assumes no direct or indirect liability or obligation to Franchisee with respect to collecting amounts due to, or maintaining, directing or administering the Brand Fund.
Franchisor reserves the right to terminate (and, if terminated, to reinstate) the Brand Fund.
If the Brand Fund is terminated, all unspent monies on the date of termination accrued will be distributed to franchisees operating a Buff City Soap makery in proportion to their respective contributions to the Brand Fund accrued during the preceding three-month period.
- (d) Local Marketing Expenditure.
In addition to the contributions that Franchisee pays to the Brand Fund, Franchisee must make the Local Marketing Expenditure in such amounts as Franchisor establishes from time to time, which when combined with the amount Franchisee has paid in Brand Fund Contributions will not exceed 4% of Net Sales (allocated by Franchisor, at its sole option, among the Brand Fund Contribution and Local Marketing Expenditure), during the Initial Term of this Agreement.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to the 2025 FDD, Buff City Soap assumes no direct or indirect liability to the franchisee regarding the Brand Fund, except as expressly provided in Section 10 of the franchise agreement. This means that Buff City Soap is generally not liable for how the Brand Fund is managed, collected, directed, or administered.
Buff City Soap will endeavor to use the Brand Fund to develop advertising and marketing materials and programs. However, Buff City Soap is not obligated to ensure that the Brand Fund expenditures in any geographic area are proportionate or equivalent to the contributions made by franchisees in that area. Additionally, Buff City Soap is not obligated to ensure that a franchisee's makery will benefit directly or in proportion to its Brand Fund contribution. Not all Buff City Soap makeries operated by the franchisor or its affiliates will pay the same Brand Fund contribution.
If the Brand Fund is terminated, the unspent monies on the date of termination will be distributed to franchisees operating a Buff City Soap makery in proportion to their respective contributions to the Brand Fund accrued during the preceding three-month period. This is a notable exception to the general lack of liability, providing some financial protection to franchisees in the event of fund termination. This proportional distribution of unspent funds offers a degree of financial security to franchisees should the Brand Fund be discontinued.