Can Pump It Up and its affiliates be reimbursed by the Brand Fund for administrative expenses?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates may be reimbursed by the Brand Fund for administrative expenses directly related to the Brand Fund's marketing programs, including without limitation, conducting market research, preparing advertising and marketing materials, and collecting and accounting for contributions to the Brand Fund.
We may use the Brand Fund to pay the administrative costs of the Brand Fund including managing the advertising, marketing, and promotional programs and payment of outside vendors utilized by the Brand Fund.
We may use the Brand Fund to pay the reasonable salaries and benefits of personnel (including our personnel and our affiliates' personnel) who manage and administer the Brand Fund.
We may use the Brand Fund to pay for other administrative costs, travel expenses of personnel while they are on Brand Fund business, meeting costs, overhead relating to Brand Fund business, and other expenses that we incur in activities reasonably related to administering or directing the Brand Fund and its programs.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, Pump It Up and its affiliates can be reimbursed from the Brand Fund for specific administrative expenses. These expenses must be directly related to the Brand Fund's marketing programs. This includes costs associated with conducting market research, preparing advertising and marketing materials, and managing the collection and accounting of contributions to the Brand Fund.
This means that a portion of the Brand Fund, which franchisees contribute to (2% of gross revenues, up to a maximum of 3%), can be used to cover the administrative costs incurred by Pump It Up or its affiliates when managing the marketing and advertising efforts for the Pump It Up system. This arrangement is fairly common in franchising, as it allows the franchisor to manage the Brand Fund and its associated activities while being compensated for the administrative work involved.
It is important to note that Pump It Up is required to account for the Brand Fund separately from its other funds, although the monies are not required to be segregated. While the Brand Fund cannot be used for Pump It Up's general operating expenses, it can cover reasonable salaries and benefits of personnel (including Pump It Up's and its affiliates' personnel) who manage the fund. Additionally, the Brand Fund can be used for other administrative costs, travel expenses of personnel on Brand Fund business, meeting costs, and overhead related to Brand Fund activities. Pump It Up will prepare an annual, unaudited statement of the Brand Fund's collections and expenses within 90 days after their fiscal year end, which is available for franchisee review upon written request.