What are the components of the Advertising Obligations for an Engineering For Kids franchise?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
escribed above.
ITEM 6 OTHER FEES
| Type of Fee (note 1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fees | The greater of: (a) the Applicable Royalty Rate(s) multiplied by the Gross Sales for the Period, or (b) a Minimum Royalty, which will be $300 per month beginning in the 7th month after you sign the Franchise Agreement. See Remarks for the Applicable Royalty Rates. | Payable monthly (at this time) on or before the 5th day of each subsequent Period (note 2) | The "Applicable Royalty Rates" are (note 2): • 7% of Gross Sales between $0 to $25,000 during the Period, • 6% of Gross Sales between $25,000.01 to $50,000 during the Period, and • 5% of Gross Sales in excess of $50,000 during the Period "Gross Sales" means all of your revenue from operating your Franchised Business, but excluding taxes collected from customers and paid to taxing authority, and customer coupon sales (for which customers do not pay for complimentary or reduced price services or product) and refunds. |
| Advertising Obligations (note 3) • Brand Fund • Regional Fund • Local Advertising expenditures | Maximum: 4% of your Gross Sales, plus (if applicable) the amount that your Minimum Local Ad Spend exceeds your Local Ad Percentage Spend for the month. Currently: • Brand Fund: 2%; and | Same as Royalty for contributions to the Brand Fund | We may require you to contribute to a Brand and/or a "Regional Fund" and/or conduct and spend monies on local advertising. We currently require you to make contributions to the Brand Fund and to directly spend monies on local advertising that you conduct. We can change the allocation between the forms of advertising. Please see Note 3 below and the Advertising section in Item 11. |
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2025 FDD)
According to Engineering For Kids's 2025 Franchise Disclosure Document, the advertising obligations consist of contributions to the Brand Fund, contributions to a Regional Fund, and local advertising expenditures. The maximum advertising obligation is 4% of gross sales, plus any amount by which the minimum local ad spend exceeds the local ad percentage spend for the month. Currently, Engineering For Kids requires franchisees to contribute 2% of gross sales to the Brand Fund and also spend money directly on local advertising.
The local advertising component is the greater of 2% of gross sales (the "Local Ad Percentage Spend") or $100 per month (the "Minimum Local Ad Spend"). These advertising contributions are due at the same time as royalty payments. However, Engineering For Kids retains the right to modify the allocation of advertising expenses between the Brand Fund, Regional Fund, and local advertising.
Prospective franchisees should note that while there is currently a Brand Fund in effect, there are no Regional Funds. This means franchisees are not presently required to contribute to a Regional Fund, but Engineering For Kids could implement such a requirement in the future. Franchisees should carefully review Item 11 of the FDD for more details on advertising and promotional requirements to fully understand their obligations and how Engineering For Kids may change these requirements.