Will contributions to the Fund by Hyper Kidz franchisees be used to solicit new franchisees?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ed in connection with collecting any Brand Development Fee). The Fund and its earnings will not otherwise benefit us except that any resulting technology and intellectual property shall be deemed the property of Franchisor.
- (c) You must participate in all advertising and public relations programs conducted by the Fund. The Fund may furnish you with samples of certain marketing, advertising and promotional formats and other such materials without charge. We will not spend any contributions to the Fund on advertising that is a solicitation of new franchisees.
- (d) All sums paid by franchisees to the Fund, plus income earned from the Fund, shall be maintained in an account separate from our other funds and shall not be used by us for any purposes other than those provided for herein. Upon your request, we shall, within one hundred twenty (120) days following the close of each fiscal year, prepare and distribute to all franchisees an unaudited statement detailing Fund income and expenses for such fiscal year.
- (e) 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. 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 monies remaining in the Fund at the end of any fiscal year shall carry over to the next fiscal year.
- (f) You authorize us to collect for remission to the Fund any advertising or promotional monies or credits offered by any supplier based upon purchases by you.
- (g) We will have the right to cause the Fund to be incorporated or operated through an entity separate from us at such time as we deem appropriate, and such successor entity shall have all our rights and duties pursuant to this Section.
- (h) You understand and acknowledge that the Fund is intended to maximize recognition of the Marks and patronage of Hyper Kidz Businesses generally.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, franchisee contributions to the Brand Development Fund will not be used for advertising that solicits new franchisees.
The FDD specifies that Hyper Kidz will maintain all sums paid by franchisees to the Fund, along with any income earned from the Fund, in a separate account. These funds will not be used for any purposes other than those outlined in the agreement. Franchisees can request an unaudited statement detailing the Fund's income and expenses within 120 days following the close of each fiscal year.
Hyper Kidz retains the flexibility to spend more or less than the aggregate franchisee contributions to the Fund in any given fiscal year. The Fund may also borrow from Hyper Kidz or other lenders at standard commercial interest rates to cover deficits or invest any surplus for future use. Any remaining funds at the end of a fiscal year will be carried over to the next fiscal year.
Hyper Kidz is authorized to collect advertising or promotional monies or credits offered by suppliers based on franchisee purchases for remission to the Fund. The aim of the Fund is to maximize recognition of the Hyper Kidz brand and patronage of Hyper Kidz businesses. While Hyper Kidz will endeavor to use the Fund to develop advertising and marketing materials and programs to benefit all Hyper Kidz businesses, there is no obligation to ensure that expenditures in any geographic area are proportionate to the contributions from Hyper Kidz businesses in that area, or that any Hyper Kidz business will benefit directly or in proportion to its contribution.