How is the local advertising expenditure requirement for an Engineering For Kids franchise calculated?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
ion 9.4 below); and/or (c) spend amounts on local advertising (as described in Section 9.5 below) in such amounts as we designate under Section 9.2.1 below, provided that the amounts that we require will not, in the aggregate, exceed an amount equal to (i) four percent (4%) of the Gross Sales of the Franchised Business during the preceding Period, plus (if applicable) (ii) the amount by which the Minimum Local Ad Spend (as defined below) exceeds your then-current Local Ad Percentage Spend (as defined below) for the Period (the "Advertising Obligation").
- 9.2.1. We will specify the respective portions of the Advertising Obligation that you must contribute to the Brand Fund, contribute to any Regional Fund, and/or spend directly on local advertising and promotion, and we may adjust the respective portions from time to time. As of the Effective Date, the Advertising Obligations are allocated as: (a) contributions in the amount of two percent (2.0%) of your Gross Sales to the Brand Fund; and (b) expenditures on local advertising (in accordance with Section 9.5 below) in an amount equal to the greater of two percent (2.0%) of your Gross Sales for that Period (the "Local Ad Percentage Spend") or One Hundred Dollars ($100) (the "Minimum Local Ad Spend").
- 9.2.2. You understand that the Advertising Obligations are the amounts that we may require you to contribute or spend, and that these 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, spend additional amounts on advertising to promote your Franchised Business and the services you offer in your Territory. 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.
9.2.3. For all company-owned or affiliate-owned Engineering For Kids Businesses, we or our affiliates will contribute to the Brand Fund and/or a Regional Fund on the same basis as franchisees; provided, however that moneys that we or our affiliates spend on activities, materials or products to advertise and promote the System and Businesses (which may include costs for the System website, Online Sites, and other on-line advertising (other than advertising primarily targeted toward the sale of franchises) will be credited towards our or our affiliates' contribution obligations.
**9.3.
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 obligated to spend on local advertising. The amount is calculated as the greater of two percent of gross sales for the period or $100. This is referred to as the 'Local Ad Percentage Spend' and the 'Minimum Local Ad Spend' respectively.
Engineering For Kids retains the right to specify and adjust the portions of the advertising obligation that franchisees must contribute to the Brand Fund, any Regional Fund, or spend directly on local advertising and promotion. Franchisees should be aware that the required advertising expenditure may not always be sufficient to achieve adequate exposure for their services and are permitted to spend additional amounts at their discretion. However, any additional spending beyond the required amounts will not reduce their obligations to contribute to the Brand Fund or any applicable Regional Fund.
During the first three months of operation, Engineering For Kids franchisees must conduct an initial marketing campaign with a minimum expenditure of $2,500. These initial marketing expenditures can be credited towards any advertising contributions or expenditures otherwise required during that initial three-month period. All advertising plans and materials, including those for the Initial Marketing Campaign, require prior written approval from Engineering For Kids. Franchisees must also adhere to the standards and requirements specified in the manual and conduct all advertising in a dignified manner.