Can the Burros Fries System Advertising Fund borrow money to cover deficits?

According to Burros Fries's 2024 Franchise Disclosure Document, the System Advertising Fund can borrow money to cover deficits. Specifically, Burros Fries may spend more on behalf of the fund in any fiscal year than the aggregate contribution of all franchises in that year. To cover these deficits, the fund may borrow from Burros Fries or other sources.

This is a common practice in franchising, allowing the franchisor to maintain consistent advertising efforts even if current contributions are insufficient. It is important to note that Burros Fries administers the fund, and it is not audited. While this provides flexibility, it also means franchisees rely on Burros Fries's discretion in managing the fund's finances.

For a prospective Burros Fries franchisee, this means that advertising efforts may be sustained even during periods of lower contributions. However, it also introduces a risk, as the fund's financial management is not subject to independent auditing. Franchisees should request and review the annual un-audited statement of monies collected and costs incurred by the fund to stay informed about its financial status.