Who administers the brand development Fund for the Fitstop system?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
Currently, any Fund Contributions are payable to us. We have the right to establish in the future a non-profit corporation or other business entity to collect Fund advertising contributions from our Franchisees. The Fund is administered by our accounting and marketing personnel under our direction. We may have the Fund borrow from us or other lenders to cover any Fund deficits. We may have the fund invest any surplus for the Fund's future use. You will be able to obtain an accounting annually upon written request to our President at our principal place of business 120 days after our latest fiscal year end. We claim no power to require that advertising cooperatives be formed, changed, dissolved or merged. (Franchise Agreement - Section 9.)
We will not be required to spend any of your Fund Contributions in the Designated Territory you are granted under your Franchise Agreement, and we will provide you with an unaudited accounting of the Fund within 120 days after our fiscal year end (upon your written request). We are not required to have the Fund audited, but we may do so and use the Fund Contributions to pay for such an audit. If we do not spend all Fund Contributions in a given year, any excess funds will rollover into the Fund for use during the following year. We will have the right to modify or discontinue the Fund (if established), as we deem appropriate in our sole discretion.
As we have not yet established a Fund, please be advised that we neither collected nor expended any Fund Contributions in the fiscal year ending December 31, 2023.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 24–35)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the brand development fund is administered by Fitstop's accounting and marketing personnel under the direction of Fitstop. Currently, any fund contributions are payable directly to Fitstop. However, Fitstop retains the right to establish a non-profit corporation or other business entity in the future to collect fund advertising contributions from franchisees.
Fitstop also has the right to have the fund borrow from Fitstop or other lenders to cover any fund deficits, and Fitstop may have the fund invest any surplus for the fund's future use. Franchisees are able to obtain an accounting annually upon written request to Fitstop's President at the principal place of business, 120 days after the latest fiscal year end.
It's important to note that Fitstop is not required to spend any of a franchisee's fund contributions in the designated territory granted under the Franchise Agreement. Fitstop will provide an unaudited accounting of the fund within 120 days after the fiscal year end upon a franchisee's written request. Fitstop is not required to have the fund audited, but it may do so and use the fund contributions to pay for such an audit. Any excess funds will roll over into the fund for use during the following year. Fitstop has the right to modify or discontinue the fund, if established, as it deems appropriate in its sole discretion.
As of the issue date of the 2024 FDD, Fitstop had not yet established a fund, and therefore neither collected nor expended any fund contributions in the fiscal year ending December 31, 2023. This means that prospective franchisees should inquire about the current status and future plans for the brand development fund to understand how their contributions will be managed and utilized.