As an Engineering For Kids franchisee, am I required to contribute to the Brand Fund?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
l of the Advertising Obligations are allocated between the three components.
Currently, the Advertising Obligations are allocated so that you must (1) contribute 2% of your Gross Sales to the Brand Fund, and (2) spend on local advertising an amount equal to the greater of 2% of your Gross Sales (the "Local Ad Percentage Spend") or $100 per month (the "Minimum Local Ad Spend"). The Local Ad Percentage Spend (or if applicable the Minimum Local Ad Spend) is the amount that we require you to spend on local efforts that you conduct, but you may choose to spend more on local advertising, and any additional amounts that you spend will not count towards your requirement to contribute to the Brand Fund. At this time, there are no Regional Funds. When we change the Advertising Obligations, we give you reasonable written notice to you, and your total Advertising Obligations (whether as contributions and/or expenditures) will not exceed 3% of your Gross Sales (plus, if applicable, the amount by which the Minimum Local Ad Spend exceeds your then-current Local Ad Percentage Spend for that month). The Advertising Obligations are the amounts that we may require you to contribute or spend on advertising. The required amounts may not be sufficient in all cases to develop or maintain adequate exposure to the services offered by your Franchised Business. You may, in your business judgment, choose to spend additional amounts on advertising to promote your Franchised Business and the services you offer in your Territory, so long as your advertising activities are in compliance with the Franchise Agreement. If you spend monies on local advertising in excess of the amounts that we require as part of the Advertising Obligations, the additional amounts will not be applied to, or otherwise reduce, your obligations to contribute amounts to the Brand Fund or, if applicable, a Regional Fund for any Period. We are not required to spend monies on advertising in your Territory or any specific area.
The Brand Fund
We established a special fund called the "Brand Fund." The Brand Fund is for the benefit of all franchisees and company or affiliate-owned Businesses that contribute to it. We have the exclusive right to maintain, operate
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 25–36)
What This Means (2025 FDD)
According to Engineering For Kids's 2025 Franchise Disclosure Document, franchisees are required to contribute to the Brand Fund. Currently, franchisees must contribute 2% of their gross sales to the Brand Fund. In addition to the Brand Fund contribution, franchisees are also required to spend on local advertising an amount equal to the greater of 2% of their gross sales (referred to as the "Local Ad Percentage Spend") or $100 per month (referred to as the "Minimum Local Ad Spend").
The Engineering For Kids Brand Fund is used for the benefit of all franchisees and company or affiliate-owned businesses that contribute to it. The franchisor has the exclusive right to maintain, operate, and administer the Brand Fund. The FDD specifies that the franchisor may modify these advertising obligations, but the total advertising obligations (contributions and/or expenditures) will not exceed 3% of gross sales, plus any amount by which the Minimum Local Ad Spend exceeds the Local Ad Percentage Spend.
The Brand Fund expenditures during the last fiscal year were allocated as follows: 70% on marketing promotional content and marketing support, 20% on digital assets, and 10% on the website. The Engineering For Kids FDD also describes the possibility of a Regional Fund, which is designated for specific geographical areas. If a Regional Fund is established for the franchisee's area, the franchisee must become a member and contribute to that fund as well. Franchisees must submit their Regional Contribution to the Regional Fund by electronic funds transfer on the same schedule as their Royalty Fees.