Can the Advertising and Development Fund for Focalpoint Coaching invest surplus funds for future use?
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 can invest surplus funds for future use. The document states that the Fund may spend more or less than the total contributions in a fiscal year, borrow funds to cover deficits, repay borrowed amounts, or invest any surplus for future use. This provides Focalpoint Coaching with flexibility in managing the Fund's resources.
This ability to invest surplus funds allows Focalpoint Coaching to potentially grow the Fund over time, which could lead to more extensive advertising and marketing initiatives. It also gives them the option to save during periods of high revenue to offset potential shortfalls in other periods. However, franchisees should be aware that the FDD does not specify how these investments are managed or what types of investments are made, which introduces an element of uncertainty.
While the FDD outlines the permitted uses of the Advertising and Development Fund, it does not guarantee any specific return on investment or level of advertising support. As a prospective franchisee, it would be prudent to inquire about the Fund's investment strategy, historical performance, and the criteria used to determine advertising expenditures. Understanding these aspects can help a franchisee assess the potential benefits and risks associated with the Fund.
In addition, the FDD states that Focalpoint Coaching does not have a fiduciary obligation to franchisees for administering the Fund. This means that while they are contractually obligated to use the funds for their permitted purposes, they are not held to the same standard of care as a fiduciary. This is a common practice in franchising, but it's important for franchisees to understand the limitations of the franchisor's responsibility in managing the Fund.