Can the Hyper Kidz Fund borrow money to cover deficits?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the Fund can borrow money to cover deficits. Specifically, the Hyper Kidz Fund may borrow from Hyper Kidz or other lenders at standard commercial interest rates to cover deficits. Alternatively, the Fund can invest any surplus for future use by the Fund. Any monies remaining in the Fund at the end of any fiscal year will carry over to the next fiscal year.
This means that if the advertising fund runs short, Hyper Kidz has the option to take out loans to maintain its operations. These loans would be acquired at standard commercial interest rates. This also provides flexibility in managing the fund's finances, allowing for both borrowing in times of need and investment of surplus funds for future use. The fact that unspent money carries over to the next fiscal year provides additional financial stability for the fund.
As a Hyper Kidz franchisee, it's important to understand how the advertising fund is managed, as you are required to participate in all advertising and public relations programs conducted by the Fund. While Hyper Kidz endeavors to utilize the Fund to benefit all Hyper Kidz Businesses, there is no obligation to ensure that expenditures by the Fund in or affecting any geographic area are proportionate or equivalent to the contributions to the Fund by Hyper Kidz Businesses operating in that geographic area.