Is the Advertising and Development Fund for Focalpoint Coaching considered a trust?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
We will account for the Fund separately from our other funds and not use the Fund for its or our general operating expenses. However, we may use the Fund to pay the reasonable salaries and benefits of personnel who manage and administer the Fund, the Fund's other administrative costs, travel expenses of personnel while they are on Fund business, meeting costs, exposition and show costs, overhead relating to Fund business, and other expenses that we incur in activities reasonably related to administering or directing the Fund and its programs, including conducting market research; public relations; preparing advertising, promotion, and marketing materials; and collecting and accounting for Fund contributions.
The Fund is not our asset. The Fund also is not a trust. We have a contractual obligation to hold all Fund contributions for the benefit of the contributors and to use contributions only for their permitted purposes (described above). We do not have a fiduciary obligation to you for administering the Fund. 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 is explicitly stated not to be a trust. While Focalpoint Coaching has a contractual obligation to hold all fund contributions for the benefit of the contributors and to use the contributions only for their permitted purposes, they do not have a fiduciary obligation to franchisees for administering the Fund. This means that while Focalpoint Coaching must use the funds for advertising and development, they are not held to the same legal standard as a trustee.
The FDD specifies that Focalpoint Coaching will account for the Fund separately from their other funds and will not use the Fund for its or their general operating expenses. However, they may use the Fund to cover reasonable salaries and benefits of personnel who manage the fund, administrative costs, travel expenses, meeting costs, exposition and show costs, overhead relating to Fund business, and other related expenses.
Focalpoint Coaching retains significant control over the Fund, including the ability to spend more or less than the total contributions in any fiscal year, borrow funds to cover deficits, repay borrowed amounts, or invest any surplus for future use. The document also states that while they do not expect to use Fund contributions specifically to solicit franchisees, materials prepared using Fund contributions may reference the availability of franchises and process franchise leads. Franchisees are entitled to receive an annual, unaudited statement of Fund collections and expenses upon written request, and Focalpoint Coaching may have the Fund audited annually at the Fund's expense.