Is Endless Summer Sweets a fiduciary with respect to the Marketing Fund?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
The Marketing Fund will be spent at Franchisor's sole discretion, and Franchisor is not a fiduciary with respect to the Marketing Fund.
- (d) Contribution by Other Outlets.
Franchisor is not obligated to (i) have all other Endless Summer Sweets businesses (whether owned by other franchisees or by Franchisor or its affiliates) contribute to the Marketing Fund, or (ii) have other Endless Summer Sweets businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as Franchisee.
- (e) Surplus or Deficit.
Franchisor may accumulate funds in the Marketing Fund and carry the balance over to subsequent years.
If the Marketing Fund operates at a deficit or requires additional funds at any time, Franchisor may loan such funds to the Marketing Fund on reasonable terms.
- (f) Financial Statement.
Franchisor will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close Franchisor's fiscal year and will provide the financial statement to Franchisee upon request.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, Endless Summer Sweets is not a fiduciary with respect to the Marketing Fund. This means that Endless Summer Sweets has the sole discretion on how the Marketing Fund is spent.
As Endless Summer Sweets is not a fiduciary, it is not obligated to have all other Endless Summer Sweets businesses, whether owned by franchisees, the franchisor, or its affiliates, contribute to the Marketing Fund. Furthermore, Endless Summer Sweets is not obligated to ensure that all Endless Summer Sweets businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as the franchisee.
Endless Summer Sweets may accumulate funds in the Marketing Fund and carry the balance over to subsequent years. If the Marketing Fund operates at a deficit or requires additional funds, Endless Summer Sweets may loan such funds to the Marketing Fund on reasonable terms. Endless Summer Sweets will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of the franchisor's fiscal year and will provide the financial statement to the franchisee upon request.