Can Buona use the Marketing Fund to defray its general operating expenses?
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.
You understand and acknowledge that the Marketing Fund is intended to maximize recognition of the Marks and patronage of Buona Businesses. Although we will endeavor to use the Marketing Fund to develop advertising, marketing and promotional materials, and to place advertising in a manner that will benefit all Buona Businesses, we have no obligation to ensure that expenditures by the Marketing Fund in or affecting any geographic area are proportionate or equivalent to contributions to the Marketing Fund by Buona Businesses operating in that geographic area or that any Buona Business will benefit directly or in proportion to its contribution to the Marketing Fund from the development of advertising, marketing and promotional materials or the placement of advertising. We assume no direct or indirect liability or obligation to Franchisee with respect to the maintenance, direction, or administration of the Marketing Fund. We may terminate or discontinue the Marketing Fund upon 30 days' notice to our franchisees. In that event, we will distribute all unspent monies to our franchisees in proportion to their respective contributions made in the previous 12 months. We have the right thereafter to reinstate the Marketing Fund upon 30 days' notice to our franchisees.
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 is maintained as a separate account and will not be used to cover Buona's general operating expenses. However, there is an exception: Buona can use the Marketing Fund to cover reasonable salaries, administrative costs, and overhead that are incurred while administering the Marketing Fund and its advertising, marketing, and promotional programs. These activities include conducting market research, preparing advertising materials, and managing contributions to the Marketing Fund.
Buona has the discretion to spend more or less than the total contributions from Buona businesses in any given fiscal year. The Marketing Fund can also borrow funds or invest surplus money for future use. Any interest earned on the Marketing Fund will be used to pay for advertising, marketing, and promotional costs before using other assets of the fund. Franchisees are entitled to receive an annual unaudited statement of monies collected and costs incurred by the Marketing Fund upon written request.
While Buona aims to maximize brand recognition and patronage through the Marketing Fund, it is not obligated to ensure that expenditures in any geographic area are proportionate to the contributions from Buona businesses in that area. Additionally, there is no guarantee that any Buona business will directly benefit from the fund in proportion to its contribution. Buona assumes no direct liability to franchisees regarding the management of the Marketing Fund and can terminate or reinstate the fund with 30 days' notice to franchisees, distributing any unspent monies proportionally based on contributions from the previous 12 months if terminated.
Prospective franchisees should be aware that while the Marketing Fund aims to support all Buona businesses, its benefits may not be directly proportional to their contributions or localized impact. Understanding the specific allocation and potential benefits for their location will be crucial for franchisees.