Can the Hyper Kidz Brand Development Fund borrow money to cover deficits?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
The Fund is held in an account separate from our general funds. We may spend in any fiscal year an amount greater or less than the aggregate contribution of all Hyper Kidz Businesses to the Fund in that year and the Fund may borrow from us or other lenders at standard commercial interest rates to cover deficits of the Fund or cause the Fund to invest any surplus for future use by the Fund. Any money remaining in the Fund at the end of any year will carry over to the next year. We will prepare within 120 after each fiscal year end, and furnish to you upon written request, an annual, unaudited statement of money collected and costs incurred by the Fund.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 24–33)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the Brand Development Fund can borrow money. Specifically, the Fund may borrow from Hyper Kidz or other lenders at standard commercial interest rates to cover deficits. Alternatively, the Fund may invest any surplus for future use. Any money remaining in the Fund at the end of any year will carry over to the next year.
This means that Hyper Kidz has the flexibility to manage the Brand Development Fund to ensure it can continue to support advertising and marketing efforts even if current contributions are insufficient. The ability to borrow funds allows for consistent promotional activities, while investing surpluses ensures long-term financial stability for the Fund.
Hyper Kidz will prepare and furnish an annual, unaudited statement of money collected and costs incurred by the Fund within 120 days after each fiscal year end, upon written request. This provides franchisees with some transparency regarding the Fund's financial activities. However, the statement is unaudited, so franchisees may want to inquire further about the level of financial oversight and accountability for the Fund.