Does Hyper Kidz's contribution of allowances, rebates, or other payments to the Brand Development Fund diminish or eliminate a franchisee's obligation to pay the Brand Development Fee?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
12.1.1 Franchisor has established a national fund on behalf of the System for national advertising, marketing, and brand development. You shall contribute to the Fund an amount equal to two percent (2%) of Gross Sales, payable at the same time and in the same manner as the Royalty Fees payable hereunder ("Brand Development Fee"). We may periodically receive allowances, rebates or other payments from approved suppliers based on purchases from such suppliers by our franchisees, and we may elect to contribute such allowances, rebates or other payments to the Fund. You understand and acknowledge, however, that any such contribution of these amounts by us to the Fund does not in any manner diminish or eliminate your obligation to pay the Brand Development Fee.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the franchisor's contributions to the Brand Development Fund do not reduce a franchisee's obligation to pay the Brand Development Fee. Hyper Kidz franchisees are required to contribute 2% of Gross Sales to the Brand Development Fund. Hyper Kidz may contribute allowances, rebates, or other payments they receive from approved suppliers to the fund.
The Brand Development Fund is used for national advertising, marketing, and brand development for the Hyper Kidz system. The franchisor has sole discretion over the advertising and public relations programs financed by the fund. This includes decisions about creative concepts, materials, and media.
The fund can cover various costs, such as developing marketing ideas, market research, merchandising programs, marketing campaigns, promotional ideas, strategies, creative materials, advertisements, and public relations campaigns. It also covers technical and professional advice related to these activities and the placement of advertising. Hyper Kidz can reimburse itself from the fund for the costs of developing, producing, and distributing advertising materials, as well as for collecting the Brand Development Fee, including legal, auditing, and accounting fees.
Franchisees are required to participate in all advertising and public relations programs conducted by the Brand Development Fund. The fund may provide franchisees with samples of marketing, advertising, and promotional materials without charge. The franchisor emphasizes that any contribution they make to the fund does not diminish or eliminate the franchisee's obligation to pay the Brand Development Fee.