For Exit, what happens to the Sponsoring Bonuses if the individual beneficiary dies?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPT]
- a) Sponsors may select a beneficiary to receive the Sponsoring Bonuses upon the death of the Sponsor. Beneficiary designation shall be in writing on documentation supplied or approved by EXIT and must be delivered to EXIT prior to the Sponsor's death. The designated beneficiary may be an individual, or a trust. The Sponsoring Bonuses shall end upon the death of the Sponsor if a beneficiary has not been designated. If an individual beneficiary has been designated, the Sponsoring Bonuses shall end upon the death of the beneficiary.
- b) Upon the death of a Sponsor, the Sponsoring Bonuses shall be payable to the Sponsor's designated beneficiary and shall automatically be reduced from an amount equivalent to 10% to 5% of the gross Commissions generated by the Recruit, to a maximum of $5,000 per Recruit per calendar year, less Sponsoring Bonus Fees (defined in Section 9.m) above). The remaining 5% shall be paid to the "primary role" Franchise that held the Sponsor's license or, if the Sponsor was not a licensed Sales Representative, to the Franchise for whom the Sponsor worked at the time of the Sponsor's death or, if the Franchise no longer exists, to the Subfranchise.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, if a sponsor has designated an individual as a beneficiary to receive Sponsoring Bonuses, those bonuses will cease upon the death of that beneficiary. This means that the right to receive these bonuses is not transferable beyond the originally designated individual beneficiary.
In practical terms, this condition highlights the importance of carefully considering beneficiary designations. An Exit sponsor needs to understand that the Sponsoring Bonuses are only payable to the designated individual beneficiary for their lifetime. If the sponsor wishes for the bonuses to continue beyond the death of the initial beneficiary, they should consider designating a trust as the beneficiary instead of an individual, as the document does not specify the ending of Sponsoring Bonuses to a trust upon the trust's termination.
This policy could impact estate planning for Exit sponsors. It is crucial for sponsors to keep their beneficiary designations up-to-date and to seek professional legal and financial advice to ensure their wishes are properly reflected in their estate plans. The $5,000 annual limit per recruit after the sponsor's death, along with the termination of bonuses upon the beneficiary's death, should be factored into any long-term financial projections.