Can the Degree Wellness brand development fund borrow money?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Fund will be accounted for separately from our other funds and will not be used to pay any of our general operating expenses, except for salaries, administrative costs, and overhead that we incur in activities reasonably related to the administration of the Fund and its marketing programs, including preparing advertising and marketing materials, and collecting and accounting for contributions to the Fund. We may spend in any fiscal year an amount greater or less than the aggregate contributions to the Fund in that year, and the Fund may borrow from us or other lenders to cover the Fund's deficits or invest any surplus for future use by the Fund. We will prepare an annual unaudited statement of monies collected and costs incurred by the Fund and will provide it to you upon written request. A franchisee may request an annual report of general category spending of the Fund. This report may be requested in writing and will be provided in the manner we determine no more than one time per year and only after March 1 for the prior year. There is no history of a prior fiscal year to disclose in this disclosure document.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 32–42)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the brand development fund has the ability to borrow money. Specifically, the FDD states that the Fund may borrow from Degree Wellness or other lenders to cover deficits.
This is a common practice in franchising, as advertising funds can experience fluctuations in revenue and expenses. The ability to borrow provides Degree Wellness with flexibility in managing the Fund and ensuring that advertising and marketing efforts can continue even during periods when contributions are lower than anticipated.
It's important to note that Degree Wellness also has the right to invest any surplus in the fund for future use. This further demonstrates the brand's control over the fund's financial management. As a franchisee, it's crucial to understand that Degree Wellness is not a fiduciary with respect to the management of the Fund.