Does Chop5 Salad Kitchen have a fiduciary obligation to franchisees regarding the administration of the brand fund?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
We have sole discretion in determining the content, concepts, materials, media, endorsements, frequency, placement, location and all other matters pertaining to marketing or advertising activities. Any surplus in the fund may be invested and we may lend money to the fund if there is a deficit. The fund is not a trust and we have no fiduciary obligations to you with respect to our administration of the fund. We will prepare, and make available to you upon request, an annual statement of fund operations, including deposits and disbursements. In terms of marketing activities paid for by the fund, we do not ensure that: (a) expenditures in (or affecting) a given geographic area are proportionate or equivalent to the brand fund fees paid by franchisees in that geographic area; or (b) franchisees benefit directly or in proportion to their brand fund fees. We may suspend or discontinue the fund at any time in our sole discretion upon 30 days' prior notice.
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, Chop5 Franchise LLC does not have fiduciary obligations to franchisees regarding the brand fund. The FDD states that the brand fund is not a trust.
The brand can use any surplus funds for investment purposes and can also lend money to the fund to cover deficits. Chop5 Salad Kitchen has sole discretion in determining all aspects of marketing and advertising activities, including content, media, and placement.
Chop5 Salad Kitchen will provide an annual statement of fund operations, detailing deposits and disbursements, available to franchisees upon request. The brand does not ensure that marketing expenditures are proportionate to fees paid by franchisees in a specific geographic area, nor that franchisees will directly benefit in proportion to their brand fund fees. Chop5 Salad Kitchen also retains the right to suspend or discontinue the fund at any time with 30 days' prior notice.