Can Engineering For Kids require franchisees to contribute to a Regional Fund?
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%; |
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2025 FDD)
According to Engineering For Kids' 2025 Franchise Disclosure Document, franchisees may be required to contribute to a Regional Fund. The document states that the maximum advertising obligation, which includes contributions to the Brand Fund, Regional Fund, and local advertising, can be up to 4% of gross sales. Currently, Engineering For Kids requires a 2% contribution to the Brand Fund. However, there are no Regional Funds in effect at this time.
Engineering For Kids retains the right to change the allocation between different forms of advertising, meaning they could implement a Regional Fund in the future. The funds are due at the same time as royalty payments.
Prospective franchisees should be aware that while there is no current Regional Fund contribution, Engineering For Kids has the right to implement one, up to a maximum of 4% of gross sales for all advertising obligations combined. Franchisees should factor this potential expense into their financial planning and discuss the likelihood and potential amount of a Regional Fund contribution with Engineering For Kids.