Can the Burros Fries System Advertising Fund invest surplus funds for future use?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
We may spend, on behalf of the Fund, in any fiscal year an amount greater or less than the aggregate contribution of all franchises in that year, and the Fund may borrow from us or others to cover deficits or invest any surplus for future use.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–38)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the System Advertising Fund can invest surplus funds for future use. Burros Fries may spend more or less than the aggregate franchise contributions in any fiscal year. To cover deficits, the Fund may borrow from Burros Fries or other sources. Conversely, any surplus can be invested for later use.
This clause provides Burros Fries with financial flexibility in managing the advertising fund. It allows them to smooth out advertising expenditures over time, ensuring consistent promotional efforts even if current contributions fluctuate. The ability to borrow funds can be beneficial in seizing immediate advertising opportunities or addressing unexpected market changes.
However, it's important to note that the FDD also states that the System Advertising Fund is not audited. While Burros Fries will provide an annual unaudited statement of monies collected and costs incurred, franchisees do not have complete transparency regarding investment decisions or fund management. Franchisees should request and carefully review these statements to understand how the fund is being managed and how surplus funds are being invested.