Can the Advertising and Development Fund for Focalpoint Coaching borrow money to cover deficits?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
The Fund may spend in any fiscal year more or less than the total Fund contributions in that year, borrow from us or others (paying reasonable interest) to cover deficits, pay back outstanding principal amounts borrowed in prior years from us or third parties, or invest any surplus for future use. We do not expect to use any of the Fund contributions specifically to develop materials and programs to solicit franchisees. However, media, materials, and programs, including our Website, prepared using Fund contributions may describe our franchise program, reference the availability of franchises and related information, and process franchise leads. We will prepare an annual, unaudited statement of Fund collections and expenses and give it to you upon written request. We may have the Fund audited annually, at the Fund's expense, by an independent certified public accountant. We may incorporate the Fund or operate it through a separate entity when we think best. The successor entity will have all of the rights and duties described here.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 28–36)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the Advertising and Development Fund has the ability to borrow money. Specifically, the Fund may borrow from Focalpoint Coaching or other sources to cover any deficits that may occur. If the Fund does borrow, it will pay reasonable interest on the borrowed amount.
In addition to borrowing, the Fund can also spend more or less than the total contributions in a given fiscal year. This provides flexibility in managing the Fund's resources and addressing the advertising and development needs of Focalpoint Coaching franchisees. The Fund can also pay back any outstanding principal amounts borrowed in prior years from Focalpoint Coaching or third parties. Furthermore, the Fund has the option to invest any surplus funds for future use, ensuring that resources are available for ongoing advertising and development initiatives.
These financial flexibilities are typical for advertising funds in franchising, allowing for strategic management of marketing resources over time. However, as the franchisee, it's important to note that Focalpoint Coaching does not have a fiduciary obligation to franchisees for administering the Fund. While the franchisor must hold all Fund contributions for the benefit of the contributors and use them only for their permitted purposes, this is a contractual obligation rather than a fiduciary one. Franchisees should request and review the annual, unaudited statement of Fund collections and expenses to understand how the Fund is being managed.