What is the purpose of the Brand Development Fund for Hyper Kidz?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
all our rights and duties as described in this section and in the Franchise Agreement.
The Fund is intended to maximize recognition of the Marks and patronage of Hyper Kidz Businesses generally. Although we will try to use the Fund to develop advertising and marketing materials and programs, and to place advertising, to benefit all Hyper Kidz Businesses, we have no obligation to make sure that expenditures by the Fund in or affecting any geographic area are proportionate or equivalent to the contributions to the Fund by the Hyper Kidz Businesses operating in that geographic area, or that any Hyper Kidz Business will benefit directly or in proportion to its contribution to the Fund from the development of advertising and marketing materials or the placement of advertising. Your failure to derive this benefit will not serve as a basis for a reduction or elimination of your obligation to contribute to the Fund. We have no fiduciary obligation to you or any other Hyper Kidz Business in connection with the establishment of the Fund or the collection, control or administration of monies paid into the Fund. Except as expressly provided in the Franchise Agreement, we assume no direct or indirect liability or obligation to you with respect to the maintenance, direction, or administration of the Fund.
We have the right to terminate the Fund at any time. We will not terminate the Fund until all money in the Fund has been spent for advertising and promotional purposes. If we choose to terminate the Fund, we also have the right to reinstate it at any time, and any reinstated Fund will be maintained as described above.
In our most recently concluded fiscal year, which ended on December 31, 2023. The Brand Development Fund spending went towards 10% Local SEO, 20% Social Media Marketing, 10% Email Marketing, 10% Content Marketing, 10% Online Advertising, 10% Public Relations, 10% Sponsorships & Partnerships, 10% Local Events, 5% Customer Loyalty Programs, 5% Training and Support.
Local Marketing (Franchise Agreement 12.2)
You must conduct local marketing and promotional programs in your Designated Territory to promote your Hyper Kidz Business. You must provide us with a report within 15 days after the end of each calendar quarter detailing your local marketing activities, including verification copies of your advertising and copies of bills for expenses related to a promotion. During the term of the Franchise Agreement, you must spend 2% of Gross Sales each month for local marketing and promotion.
We reserve the right to collect some or all of your grand opening funds and/or your Local Advertising expenditure and implement grand opening campaign activities and/or Local Advertising on your behalf.
Any advertising or marketing materials you propose to use that have been prepared by or for you, or that we have not approved in the immediately preceding 12-month period, must be submitted to us and receive our approval before you may use the materials. The proposed materials must be submitted to us no later than 14 days before you intend to use them. Unless we provide our specific approval of the proposed materials within this 14-day period, the materials are deemed not approved. Any advertising or promotional materials you submit to us for our review will become our property, and there will be no restriction on our use or distribution of these materials.
At our request, you must include certain language in your local marketing, including "Franchises Available" and our website address and telephone number.
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 is designed to enhance the recognition of the Hyper Kidz brand and increase customer traffic to Hyper Kidz businesses. The fund is used for advertising, marketing, and public relations initiatives that Hyper Kidz deems necessary to promote the brand.
Franchisees are required to contribute 2% of their gross sales to the Brand Development Fund. Hyper Kidz has the discretion to determine how the funds are spent and is not obligated to ensure that the expenditures in any specific geographic area are proportional to the contributions from Hyper Kidz businesses in that area. This means that franchisees may not directly benefit from the fund in proportion to their contributions, and this will not reduce their obligation to contribute to the fund.
Hyper Kidz maintains full control over the advertising and public relations programs financed by the fund, including creative concepts, materials, and media placement. The fund can cover costs related to developing marketing ideas, conducting market research, preparing marketing campaigns and advertisements, and providing related professional advice. Hyper Kidz can also reimburse itself from the fund for the costs of developing and distributing advertising materials, as well as for the expenses incurred in collecting the Brand Development Fee. The fund is held separately from Hyper Kidz's general funds, and any money remaining at the end of a fiscal year will be carried over to the next year. Hyper Kidz will provide an annual, unaudited statement of the fund's collections and costs to franchisees upon written request.