Can Pearce Bespoke defer, waive, or compromise claims for contributions to the Brand Fund?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
In implementing the Brand Fund, Franchisor has the right to spend in any fiscal year an amount greater or less than the aggregate contributions to the Fund in that year, and the Brand Fund may borrow from Franchisor or other lenders to cover Fund deficits. Franchisor can accumulate funds over time until such time as Franchisor determines in its sole discretion that sufficient funds are available to adequately conduct Fund activities as contemplated herein. Franchisor can cause the Fund to invest any surplus. Franchisor may, in its sole discretion, defer, waive and/or compromise claims for contributions to, and/or claims against or with respect to, the Fund and take legal or other action against any franchisee in default of its obligations and/or deny it access to programs, materials and/or other benefits funded by the Brand Fund. Franchisee acknowledges and agrees that Franchisor has no obligation to ensure that expenditures by the Brand Fund are or will be proportionate or equivalent to contributions to the Fund by franchisees operating in any geographic area, or that any franchisee will benefit directly, indirectly or in proportion to its contribution to the Fund. Any interest earned on Fund contributions will be remitted to the Brand Fund. Franchisor and its affiliates will not be liable for any act or omission in connection with the Brand Fund that is consistent with this Agreement. You acknowledge that the Brand Fund is not a "trust," and does not create and is not in the nature of a "fiduciary" or similar special arrangement.
Franchisor has the right to terminate the Brand Fund in its sole discretion. The Fund shall not be terminated, however, until all Fund contributions have been expended for purposes consistent with this section or returned to then current franchisees in good standing on a pro rata basis based on total Fund contributions made by each such franchisee in the twelve (12) months immediately preceding the termination of the Fund.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, Pearce Bespoke has the authority to manage the Brand Fund with considerable discretion. Specifically, Pearce Bespoke may, at its sole discretion, defer, waive, or compromise claims for contributions to the Brand Fund. This means that Pearce Bespoke can choose to not enforce the required contributions from franchisees under certain circumstances. They can also take legal action against franchisees who default on their obligations to the Brand Fund and deny them access to programs, materials, or other benefits funded by the Brand Fund.
This discretion extends to how the Brand Fund is managed and spent. Pearce Bespoke is not obligated to ensure that the expenditures from the Brand Fund are proportionate or equivalent to the contributions made by franchisees in any specific geographic area. Nor is Pearce Bespoke required to ensure that any franchisee will benefit directly, indirectly, or in proportion to their contribution to the fund. Any interest earned on Brand Fund contributions will be remitted back into the Brand Fund.
Pearce Bespoke also retains the right to terminate the Brand Fund at its sole discretion. However, the FDD specifies that the Brand Fund cannot be terminated until all contributions have been spent for purposes consistent with the agreement or returned to franchisees in good standing. The return of funds would be on a pro rata basis, based on the total contributions made by each franchisee in the twelve months immediately preceding the termination of the fund. This provides some assurance that franchisees will receive a fair distribution of remaining funds if the Brand Fund is terminated.