Can the Buona Marketing Fund borrow money to cover deficits?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
The Marketing Fund will be a separate and distinct account and will be accounted for separately from the our other funds and will not be used to defray any of our general operating expenses, except for any reasonable salaries, administrative costs and overhead we may incur in activities reasonably related to the administration of the Marketing Fund and its advertising, marketing and promotional programs (including, without limitation, conducting market research, preparing advertising, marketing and promotional materials, and collecting and accounting for contributions to the Marketing Fund). We may spend in any fiscal year an amount greater or less than the total contribution of Buona Businesses to the Marketing Fund in that year. We may cause the Marketing Fund to borrow from us or other lenders to cover deficits of the Marketing Fund or cause the Marketing Fund to invest any surplus for future use by the Marketing Fund. All interest earned on monies contributed to the Marketing Fund will be used to pay advertising, marketing and promotional costs of the Marketing Fund before other assets of the Marketing Fund are expended. We will prepare an annual unaudited statement of monies collected and costs incurred by the Marketing Fund and will furnish it to you on written request.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 37–46)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Marketing Fund can borrow money to cover deficits. Buona may cause the Marketing Fund to borrow from Buona or other lenders to cover deficits. Buona may also cause the Marketing Fund to invest any surplus for future use by the Marketing Fund.
All interest earned on monies contributed to the Marketing Fund will be used to pay advertising, marketing and promotional costs of the Marketing Fund before other assets of the Marketing Fund are expended. Buona will prepare an annual unaudited statement of monies collected and costs incurred by the Marketing Fund and will furnish it to you on written request.
This means that if the Marketing Fund has a shortfall in funds for advertising, marketing, and promotional activities, Buona has the option to secure loans to cover these deficits. This could be beneficial for franchisees as it ensures that marketing efforts can continue even if there are temporary funding issues. However, it's important to note that Buona also has the right to invest any surplus funds, giving them control over how the money is managed and used for future marketing initiatives.