Does Exit or its affiliates have a fiduciary duty with respect to any of the funds?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
From the fees generated from each sale or lease transaction, a portion of the fee is paid to EXIT to be deposited in various separate funds administered by EXIT or its affiliate. Currently deposits are made into the following funds: United States Charitable Fund, United States Creative Fund, United States Advertising Fund, Regional Development Fund and Administrative Fund. None of the funds are audited. The Charitable Fund is administered by EXIT and is used by EXIT to make donations to a United States charity or charities selected by EXIT. The United States Creative Fund is administered by EXIT and used to create concepts and programming used for national and local advertising of EXIT. EXIT uses the Fund to pay its employees and subcontractors for the advertising services that it provides. The United States Advertising Fund is administered by EXIT and used for advertising and promotion within the EXIT System. All deposits to and expenditures from the foregoing described funds are within the sole discretion of EXIT. EXIT is not required to spend any amount on advertising or promotion in any particular area or region. The Regional Development Fund is administered by EXIT and used to purchase advertising services within the region in which the Regional Development Fees are generated. The Administrative Fund is administered by EXIT. EXIT distributes the Administrative Fund proceeds to Franchise's Administrators for the sole and exclusive purpose of paying an annual bonus to the support staff employed by the Franchise. Franchisees and Brokers of Record are not eligible to receive the support staff bonus from the Administrative Fund. If an office does not have administrative staff, or if the office does not complete and submit the Administrative Bonus information to EXIT by April 30th each year, the Administrative Fund proceeds allocated for the office will be applied to the United States Charitable Fund. The amount paid to the Franchise Administrators employed by the Franchisee is based upon the discretion of the Franchise and is uniform across the EXIT System. Neither EXIT nor its affiliates shall be considered a trustee or fiduciary with respect to any of the Funds, and no such fiduciary or trust relationship is created hereby.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, neither Exit nor its affiliates are considered trustees or fiduciaries with respect to any of the funds administered by Exit. The funds in question include the United States Charitable Fund, United States Creative Fund, United States Advertising Fund, Regional Development Fund, and Administrative Fund. The document explicitly states that no fiduciary or trust relationship is created.
Exit maintains sole discretion over all deposits to and expenditures from these funds. This means Exit is not obligated to spend any specific amount on advertising or promotion in any particular area or region. The Charitable Fund is used by Exit to make donations to charities selected by Exit, while the Creative Fund is used for national and local advertising concepts and programming. The Advertising Fund is used for general advertising and promotion within the Exit system, and the Regional Development Fund is used to purchase advertising services within the region where the Regional Development Fees are generated.
The Administrative Fund is distributed to Franchise Administrators for the purpose of paying annual bonuses to support staff employed by the Franchise. Franchisees and Brokers of Record are not eligible for these bonuses. If a franchise office does not have administrative staff or fails to submit the required information by April 30th each year, the Administrative Fund proceeds allocated for that office will be redirected to the United States Charitable Fund. The amount paid to Franchise Administrators is determined at the discretion of the Franchise and is consistent across the Exit system.
This lack of fiduciary duty means that Exit has considerable latitude in how these funds are managed and spent, which may be a point of consideration for prospective franchisees. While this arrangement provides Exit with flexibility, it also means franchisees have less direct control or say in how the funds generated from their sales or lease transactions are utilized for advertising, charitable contributions, or administrative bonuses.