Does ADQ have any fiduciary obligations to Dq Treat franchisees regarding sales promotion funds?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
ADQ establishes and conducts sales promotion activities generally for the promotion of the DQ® system, brand and products. It also establishes and conducts sales promotion activities primarily for the promotion of the Orange Julius® system, brand and products. ADQ establishes sales promotion activities for the promotion of DQ® Treat stores, and for the promotion of Orange Julius® products, all of which may be entirely different from the activities relating to other DQ® restaurants and stores. ADQ does not have any fiduciary obligations to franchisees with respect to the funds, nor any obligation to spend any amount on sales promotion in the area or territory where you are located, for a particular component or type of DQ® business or for any individual restaurant or store. ADQ has the sole right to determine how the sales promotion program fees will be spent, and the sales promotion program fees are not held by ADQ in trust.
Source: Item 11 — UItem 11U***:** U**Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 37–47)
What This Means (2025 FDD)
According to the 2025 Dq Treat FDD, ADQ does not have any fiduciary obligations to franchisees regarding sales promotion funds. ADQ establishes sales promotion activities for Dq Treat stores, which may differ from those of other DQ restaurants and stores. ADQ has the sole right to determine how sales promotion program fees are spent and these fees are not held in trust. This means that Dq Treat franchisees do not have a legal claim against ADQ regarding how these funds are managed or spent.
This lack of fiduciary duty gives ADQ significant discretion in managing and allocating sales promotion funds. While this allows ADQ to adapt marketing strategies as needed, it also means that franchisees have limited control over how their contributions are used. Dq Treat franchisees should be aware that ADQ is not legally bound to spend funds in any specific area or territory, or for any particular type of DQ business or individual restaurant.
Prospective Dq Treat franchisees should carefully consider the implications of this arrangement. While ADQ is expected to act in the best interest of the Dq Treat system, the absence of a fiduciary duty means that franchisees have limited recourse if they disagree with ADQ's decisions regarding sales promotion activities. It is important for franchisees to stay informed about ADQ's marketing plans and to communicate any concerns they may have to the franchisor.