Can an Engineering For Kids franchisee delay royalty or advertising contribution payments?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.5.1. You expressly acknowledge and agree that your obligation to make full and timely payment of Royalties and Advertising Contributions (and all other amounts provided for in this Agreement) is absolute, unconditional, fully earned, and due upon your generation and receipt of Gross Sales.
- 3.5.2. You agree that you will not, for any reason, delay or withhold the payment of all or any part of those or any other payments due hereunder, put payments in escrow or set-off same against any claims or alleged claims you may allege against us or others. You also agree that you will not, on grounds of any alleged non-performance by us or others, withhold payment of any fee, including without limitation Royalty fees or Advertising Contributions, nor withhold or delay submission of any reports due hereunder including but not limited to Sales Reports.
Source: Item 23 — RECEIPTS (FDD pages 53–138)
What This Means (2025 FDD)
According to Engineering For Kids's 2025 Franchise Disclosure Document, franchisees are explicitly prohibited from delaying or withholding royalty and advertising contribution payments. The agreement states that the obligation to make these payments is absolute, unconditional, fully earned, and due upon the generation and receipt of gross sales.
Engineering For Kids franchisees are not allowed to delay or withhold these payments for any reason, including putting payments in escrow or offsetting them against any claims against the franchisor. This also includes withholding payments based on alleged non-performance by Engineering For Kids. Franchisees must also submit all required reports, including sales reports, without delay.
This policy ensures a consistent revenue stream for Engineering For Kids and prevents disputes over payments. It also places a significant financial responsibility on the franchisee, who must ensure that funds are available to cover these obligations as they arise. This is a stricter stance than some franchise systems, which may allow for payment deferrals under specific, pre-approved circumstances.
Prospective Engineering For Kids franchisees should be aware of this strict payment policy and carefully consider their financial capacity to meet these obligations. It is crucial to have a solid financial plan and sufficient working capital to avoid any potential issues with royalty and advertising contribution payments.