What is the definition of 'Brand Fund' as it relates to Pump It Up?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Pump It Up Businesses have a distinct culture, and the image of the System and Pump It Up Businesses is an important element of the System. We have established an advertising and marketing fund ("Brand Fund") for the enhancement and protection of the System and the Marks, and for the development of advertising, marketing, and public relations programs and materials as we deem appropriate.
We will account for the Brand Fund separately from our other funds; however, we are not required to segregate any Brand Fund monies from our other monies. We will not use the Brand Fund monies for any of our general operating expenses. 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, and 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.
The Brand Fund is not our asset. Although the Brand Fund is not a trust, we will hold all Brand Fund contributions for the benefit of the System and use contributions only for the purposes described in the Franchise Agreement. We do not have any fiduciary obligation to you for administering the Brand Fund or for any other reason. In any fiscal year, the Brand Fund may spend more or less than the total Brand Fund contributions in that year, borrow from us or others (paying reasonable interest) to cover deficits, or invest any surplus for future use. We will use all interest earned on Brand Fund contributions (if any) to pay for the administrative costs of the Brand Fund before using the Brand Fund's other assets.
We will prepare an annual, unaudited statement of the Brand Fund's collections and expenses within 90 days after our fiscal year end. The financial statement of the Brand Fund is available for your review upon written request. We may have the Brand Fund audited annually, at the Brand Fund's expense, by an independent certified public accountant. We may incorporate the Brand Fund or operate it through a separate entity whenever we deem appropriate.
Currently, you must make a monthly contribution to the Brand Fund in an amount equal to 2% of your Gross Revenues from the Franchised Business. We may choose to increase this contribution to an amount not to exceed 3% of the Gross Revenues of the Franchised Business. Pump It Up Businesses operated by us and our affiliates also will contribute to the Brand Fund on the same basis as comparable franchisees.
Source: Item 11 — FRANCHISORS'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 30–41)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the Brand Fund is an advertising and marketing fund established for the enhancement and protection of the Pump It Up system and its trademarks. Its primary purpose is to develop advertising, marketing, and public relations programs and materials deemed appropriate by the franchisor. Franchisees are required to contribute to this fund. Currently, the monthly contribution is 2% of gross revenues, but Pump It Up may increase this up to 3%.
The franchisor has sole discretion over how the Brand Fund is used, with the goal of enhancing and protecting the Pump It Up system and marks, and improving public recognition. This includes control over creative concepts, materials, and their placement. The Brand Fund can be used for various advertising and promotional activities, including print ads, electronic media, market research, and social media. While the franchisor aims to enhance the brand for all Pump It Up businesses, there's no guarantee that expenditures will directly benefit any specific geographic area or be proportionate to contributions from businesses in that area.
The Brand Fund is accounted for separately from the franchisor's other funds, but it is not necessarily segregated. The franchisor and its affiliates may be reimbursed for administrative expenses directly related to the Brand Fund's marketing programs. An annual, unaudited statement of the Brand Fund's collections and expenses is prepared within 90 days after the fiscal year end and is available for review upon written request. The franchisor may also choose to have the Brand Fund audited annually by an independent certified public accountant at the Brand Fund's expense.
Pump It Up may defer, reduce, or suspend Brand Fund contributions, or even terminate the Brand Fund, with prior notice. If terminated, the monies will be used for advertising or distributed to franchisees and the franchisor in proportion to their contributions over the preceding 12 months. The Brand Fund is not considered an asset of the franchisor, and while contributions are held for the benefit of the system, the franchisor does not have a fiduciary obligation to franchisees for administering the fund. The Brand Fund may spend more or less than the contributions in a given year, borrow funds, or invest surpluses for future use.