Does Focalpoint Coaching owe a fiduciary obligation to franchisees for administering the Advertising and Development Fund?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
The Fund periodically may give Franchisee samples of advertising, marketing, and promotional formats and materials at no cost. Franchisor will sell Franchisee multiple copies of these materials at Franchisor's direct cost of producing them, plus any related shipping, handling, and storage charges.
Franchisor will account for the Fund separately from Franchisor's other funds and not use the Fund for any of Franchisor's general operating expenses. However, Franchisor 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, overhead relating to Fund business, and other expenses that Franchisor incurs in activities reasonably related to administering or directing the Fund and its programs, including, without limitation, conducting market research, public relations, preparing advertising, promotion, and marketing materials, and collecting and accounting for Fund contributions.
The Fund will not be Franchisor's asset. Although the Fund is not a trust, Franchisor will hold all Fund contributions for the benefit of the contributors and use contributions only for the purposes described in this Subsection 9.A. Franchisor does not owe any fiduciary obligation to Franchisee for administering the Fund or any other reason. The Fund may spend in any fiscal year more or less than the total Fund contributions in that year, borrow from Franchisor or others (paying reasonable interest) to cover deficits, pay back outstanding principal amounts borrowed in prior years from Franchisor or third parties, or invest any surplus for future use. Franchisor will use all interest earned on Fund contributions to pay costs before using the Fund's other assets.
Franchisor will prepare an annual unaudited statement of Fund collections and expenses and give Franchisee the statement upon written request. Franchisor reserves the right, in Franchisor's sole judgment, to have the Fund audited annually, at the Fund's expense, by an independent certified public accountant. Franchisor may incorporate the Fund or operate it through a separate entity whenever Franchisor deems appropriate. The successor entity will have all of the rights and duties specified in this Subsection 9.A.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to the 2025 Focalpoint Coaching Franchise Disclosure Document, Focalpoint Coaching does not owe a fiduciary obligation to franchisees for administering the Advertising and Development Fund. While the fund is not considered a trust, Focalpoint Coaching states that it will hold all fund contributions for the benefit of the contributors and use the contributions only for the described purposes.
Focalpoint Coaching will account for the Fund separately from its other funds and will not use the Fund for general operating expenses. The company may use the fund to pay reasonable salaries and benefits of personnel who manage and administer the fund, other administrative costs, travel expenses of personnel on fund business, meeting costs, overhead relating to fund business, and other expenses reasonably related to administering or directing the fund and its programs. These programs include conducting market research, public relations, and preparing advertising, promotion, and marketing materials.
Focalpoint Coaching states that the Fund may spend more or less than the total contributions in a fiscal year, borrow from Focalpoint Coaching or others to cover deficits (paying reasonable interest), pay back outstanding principal amounts borrowed in prior years, or invest any surplus for future use. Any interest earned on Fund contributions will be used to pay costs before using the Fund's other assets. Focalpoint Coaching will prepare an annual unaudited statement of Fund collections and expenses and give it to the franchisee upon written request. Focalpoint Coaching reserves the right to have the Fund audited annually at the Fund's expense by an independent certified public accountant and may incorporate the Fund or operate it through a separate entity.