Is Exit required to maintain the money paid by Franchisees to the Funds in separate accounts?

According to Exit's 2025 Franchise Disclosure Document, Exit is not required to keep franchisee contributions to its various funds in segregated accounts. Specifically, this applies to the advertising funds and the income they generate. This means that Exit can co-mingle these funds with other company revenue.

This practice has implications for franchisees because it reduces transparency and potentially increases the risk that advertising funds could be used for purposes other than those intended. While Exit provides annual financial statements and an accounting of the funds upon written request, the funds are not audited, which further limits independent verification of how the money is spent. Franchisees may want to inquire about the specific procedures Exit uses to track and allocate advertising funds to ensure they are used appropriately.

In 2024, Exit allocated portions of fees to other funds, including the United States Charitable Fund, which had a balance of $1,221,981.49 as of December 31, 2024, and the United States Administrative Fund, which had a balance of $232,307.93 on the same date. The Charitable Fund is used for donations to charities selected by Exit, while the Administrative Fund is used to pay year-end bonuses to the support staff employed by franchisees. The FDD does not specify whether these funds are maintained in separate accounts.

In the most recently concluded calendar year, Exit spent 11.87% of the Funds on production, 2.01% of the Funds on media placement, 0% of the Funds on administrative expenses, 57.5% of the Funds on EXIT's website and internet marketing, 16.43% of the Funds on promotions and 40.51% of the Funds for regional development. Prospective franchisees should evaluate these allocations to determine if they align with their expectations for how advertising funds should be used to support their franchise.