Is Hyper Kidz required to maintain a Brand Development Fund?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
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Brand Development Fund (Franchise Agreement 12.1)
We have a brand development fund (referred to as the "Fund") for brand development, advertising, marketing and public relations programs that we believe are necessary or appropriate to promote Hyper Kidz Businesses. You must pay a non-refundable Brand Development Fee to the Fund in an amount equal to 2% of your Gross Sales. As stated in Item 8, we may contribute Allowances we receive from approved suppliers to the Fund. If we choose to do this, it does not reduce or eliminate your obligation to pay the Brand Development Fee. Hyper Kidz Businesses owned and operated by us or our affiliates will contribute to the Fund on the same basis as our franchisees.
We will direct all advertising and public relations programs financed by the Fund with sole discretion over the creative concepts, materials, and endorsements it uses, and the geographic, market, and media placement and allocation of it. The Fund may be used to pay the costs of developing marketing ideas and concepts; developing market research and merchandising programs; preparing marketing campaigns; developing promotional ideas and strategies; preparing collateral creative materials; preparing advertisements; preparing public relations campaigns; providing technical and professional advice in connection with any of the above; and placement of advertising.
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, Hyper Kidz maintains a Brand Development Fund. As stated in Item 11, Hyper Kidz has established a brand development fund (referred to as the "Fund") for brand development, advertising, marketing, and public relations programs that they believe are necessary or appropriate to promote Hyper Kidz Businesses.
Franchisees are required to pay a non-refundable Brand Development Fee to the Fund, which is equal to 2% of their Gross Sales. Hyper Kidz may also contribute Allowances they receive from approved suppliers to the Fund; however, this does not reduce or eliminate the franchisee's obligation to pay the Brand Development Fee. Hyper Kidz Businesses owned and operated by Hyper Kidz or their affiliates will contribute to the Fund on the same basis as franchisees.
Hyper Kidz has the right to terminate the Fund at any time, but they will not do so until all money in the Fund has been spent for advertising and promotional purposes. If Hyper Kidz chooses to terminate the Fund, they also have the right to reinstate it at any time. In the most recently concluded fiscal year, which ended on December 31, 2023, the Brand Development Fund spending went towards Local SEO (10%), Social Media Marketing (20%), Email Marketing (10%), Content Marketing (10%), Online Advertising (10%), Public Relations (10%), Sponsorships & Partnerships (10%), Local Events (10%), Customer Loyalty Programs (5%), and Training and Support (5%).