What rights does Hyper Kidz have regarding allowances, rebates, credits, incentives, or benefits from suppliers?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
We have the right to collect and retain any and all allowances, rebates, credits, incentives, or benefits (collectively, "Allowances") offered by manufacturers, suppliers, and distributors to you, to us, or to our affiliates, based upon your purchases of products and services from manufacturers, suppliers, and distributors. We or our affiliates will have all of your right, title, and interest in and to any and all of these Allowances. We or our affiliates may collect and retain any or all of these Allowances without restriction (unless otherwise instructed by the manufacturer, supplier, or distributor). We may also choose to contribute these Allowances to the Brand Development Fund, but if we do so it does not reduce or eliminate your obligation to pay the Brand Development Fee. During the fiscal year ended December 31, 2023, we did not earn any Allowances.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz retains the right to collect and keep any allowances, rebates, credits, incentives, or benefits offered by manufacturers, suppliers, and distributors based on a franchisee's purchases. This means that any financial benefits or incentives that a franchisee might be eligible for from suppliers actually belong to Hyper Kidz or its affiliates.
This policy has significant financial implications for prospective Hyper Kidz franchisees. While franchisees are responsible for purchasing products and services needed to operate their business, any potential savings or earnings from supplier incentives go directly to Hyper Kidz. Franchisees cannot use these allowances to offset their costs or increase their profits.
The FDD also states that Hyper Kidz may contribute these allowances to the Brand Development Fund, but this does not reduce or eliminate a franchisee's obligation to pay the Brand Development Fee. This means that even if the allowances are used to benefit the Hyper Kidz brand as a whole, individual franchisees still have to pay their full share of the Brand Development Fee. For the fiscal year ending December 31, 2023, Hyper Kidz did not earn any Allowances.