Is a Fitstop franchisee prohibited from using the brand development Fund for their own purposes?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
franchisee/developer, and (b) we otherwise provide our prior written consent.
- 6.5 Brand Development Fund. We have established or expect to establish a brand development fund (the "Fund") designed to promote, advertise, market and/or otherwise develop the System, Proprietary Marks, System Business(es), Approved Services/Products and/or our brand generally. You will be required to contribute to the Fund an amount equal to two percent (2%) of the Gross Revenue of the Franchised Business ("Fund Contributions"), which shall be remitted to us at the same time and in the same manner as your Royalty Fees (unless we designate another method upon at least 30 days' prior written notice via the Manual(s) or otherwise). All Fund Contributions are non-refundable upon payment, and we will account separately for all sums paid to the Fund.
- 6.6 System Marketing Material and/or Promotional Campaigns. We will direct all advertising programs and have sole discretion to approve or disapprove the creative concepts, materials, and media used in the programs. Based thereon, we will have sole discretion to administer the marketing fees this Agreement describes herein. Subject to the exceptions this Agreement identifies and the Manual(s), you shall use only advertising and advertising materials we provide. Where your advertising campaign is not in conformance with the Manual(s), you will submit to us all advertising plans and advertising materials of any type, including, but not limited to, any digital media communication methods such as websites, blogs, instant message services, social media sites (i.e., Facebook, Twitter, Instagram, TikTok) and any comparable digital media communications at least 30 calendar days prior to publication, including any advertising on the internet, for our approval which we may grant or withhold in our sole judgment or modify at our discretion.
- 6.7 Ownership Acknowledgement. The approval by us of your advertising plans or advertising materials shall not, directly or indirectly, require us to pay for such advertising plans or advertising materials. Moreover, we can, at our discretion, adopt such advertising plans or advertising materials and use them for our own benefit or disseminate them for use by other franchisees.
- 6.8 Telephone and Communications Systems. You must, if requested in writing by us at any time during the Term, at your cost: (1) install and use in the Franchise telephone and other communications systems (including point of sale hardware and software) specified by us for the operation of the Franchise; (2) change or upgrade any telephone and communications systems used in the Franchise which we consider obsolete or superseded, including installation of new telephone and communication systems specified by us; and (3) ensure that all telephone and communications systems are secure from unauthorized access or use. You: must (1) pay on time all charges payable to any telecommunications service provider or to any other person in connection with the use of these systems; and (2) change, substitute, or discontinue the use of any communications number when requested by us. We can require you, at any time and for any reason, to execute a transfer of any communications number to be held by us.
- ©2024 Fitstop USA, Inc. 6.9 **Computer System;
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees are required to contribute to a brand development fund. This fund is designed to promote the Fitstop system, proprietary marks, system businesses, approved services/products, and the brand in general. Franchisees contribute 2% of their gross revenue to this fund, remitted in the same manner as royalty fees. These contributions are non-refundable.
Fitstop retains sole discretion over the administration and use of the brand development fund. They can use the fund for activities they deem appropriate to promote and develop the brand. The FDD specifies that Fitstop is not required to allocate any particular portion of the fund or a franchisee's contributions specifically to that franchisee's designated territory.
While franchisees can submit advertising plans and materials for approval, Fitstop's approval does not obligate them to pay for these plans or materials. Fitstop can also adopt these advertising plans for their own benefit or disseminate them to other franchisees. This structure ensures that the brand development fund is managed centrally by Fitstop for the overall benefit of the franchise system, rather than being controlled or used by individual franchisees for their own purposes.