Will Red Wagon Club provide franchisees with a statement of Brand Fund collections and expenses?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
We are not required to segregate Brand Fund contributions from our other funds, but we will account for contributions to the Brand Fund separately from our other funds and not use the Brand Fund contributions for any of our general operating expenses. However, we may use contributions to the Brand Fund to reimburse us or our affiliates or designees for the reasonable salaries and benefits of personnel who manage and administer or work on the Brand Fund's activities, the Brand Fund's 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. While references to the availability of franchises may appear in marketing materials, the Brand Fund will not be used primarily to sell franchises.
Contributions to the Brand Fund will not be our asset, but we do not assume or owe any fiduciary obligation to you in respect of those contributions or for administering the Brand Fund or any other reason. We will hold all Brand Fund contributions for the benefit of the contributors. We may spend in any fiscal year on Brand Fund activities 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 may use all interest earned on the Brand Fund contributions to pay costs before using the Brand Fund's other assets. We will prepare an annual, unaudited statement of Brand Fund collections and expenses and, once prepared, give you the statement for the most recently completed fiscal year upon your 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, in which case the successor entity will have all of the rights and duties we have.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–31)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, if a Brand Fund is established, Red Wagon Club will provide franchisees with an annual, unaudited statement of Brand Fund collections and expenses. This statement will be provided for the most recently completed fiscal year, but only upon a franchisee's written request.
Red Wagon Club is not required to segregate Brand Fund contributions from its other funds, but they will account for the contributions separately and not use them for general operating expenses. However, the Brand Fund can be used to reimburse Red Wagon Club, its affiliates, or designees for reasonable salaries and benefits of personnel managing the Brand Fund, administrative costs, travel expenses, meeting costs, overhead, and other expenses related to administering the Brand Fund and its programs.
Franchisees should note that contributions to the Brand Fund will not be considered an asset of Red Wagon Club, and the company does not assume any fiduciary obligation to franchisees regarding these contributions or the administration of the Brand Fund. Red Wagon Club will hold all Brand Fund contributions for the benefit of the contributors and may spend more or less than the total contributions in any fiscal year. They may also borrow funds to cover deficits or invest any surplus for future use, using any interest earned to pay costs before using the Brand Fund's other assets. Red Wagon Club also has the option to have the Brand Fund audited annually by an independent certified public accountant at the Brand Fund's expense.