What happens if the Engineering For Kids Brand Fund has a deficit?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
We may make, or refrain from making, any expenditures for advertising and promotional activities. In any calendar year, we may spend more or less than that year's aggregate Advertising Contributions to the Brand Fund. We may have the Brand Fund borrow from us or other lenders to cover any Brand Fund deficits. We may have the Brand Fund invest any surplus for the Brand Fund's future use.
We control the concepts and materials and all other matters relating to advertising, public relations, marketing, market research, and promotional campaigns. We may, however, spend the advertising contributions only for authorized purposes. Advertising contributions are intended to maximize general public recognition and acceptance of the Proprietary Marks for the benefit of the System as a whole. In administering the Brand Fund, we need not make expenditures for you that are equivalent or proportionate to your advertising contributions or insure that you benefit directly or pro rata from advertising or promotion conducted in connection with the advertising
contributions. Any promotional materials produced with Brand Fund monies will be made available to you at a reasonable cost, and the proceeds of such sales will also be deposited in the Brand Fund account.
The Advertising contributions belong to the Brand Fund; they are not our asset. We are not required to have an independent audit of the System Fund completed. We will make available an unaudited statement of contributions and expenditures for the Brand Fund 90 days after the close of our fiscal year to franchisees that make a written request for a copy. With respect to the maintaining, operating, or administering the Brand Fund, we are not a trustee or fiduciary and assume no other direct or indirect liability or obligation to you.
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' 2025 Franchise Disclosure Document, the Brand Fund may borrow from the franchisor or other lenders to cover any deficits. The franchisor has the discretion to make or refrain from making expenditures for advertising and promotional activities, and may spend more or less than the aggregate advertising contributions in any calendar year. This means that Engineering For Kids franchisees could see fluctuations in advertising support based on the Brand Fund's financial status.
The franchisor controls all aspects of advertising, public relations, marketing, market research, and promotional campaigns. While advertising contributions are intended to maximize recognition of the Engineering For Kids brand, the franchisor is not obligated to ensure that expenditures are equivalent or proportionate to individual franchisee contributions, or that franchisees benefit directly or pro rata from advertising efforts. This highlights that contributions are for the overall benefit of the system, not necessarily for direct, measurable returns for each franchisee.
Engineering For Kids will deposit all contributions to the Brand Fund in a separate account and will not use them for general operating expenses, except for reasonable administrative costs. The franchisor can deduct up to 15% of the Brand Fund for administration and management. Additionally, the franchisor may charge the Brand Fund fees at reasonable market rates for advertising, marketing, and promotional services that they provide themselves. Franchisees can request an unaudited statement of contributions and expenditures for the Brand Fund in writing, which will be made available 90 days after the close of the franchisor's fiscal year.