What accounting procedures is a Kidokinetics franchisee required to use?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
11.2. Bookkeeping and Reports.
- 11.2.1. Franchisee agrees to keep and maintain complete and accurate books and records of its transactions and business operations utilizing the accounting procedures specified by Franchisor. Franchisee agrees to: (i) purchase the computer systems in accordance with the requirements of this Agreement; and (ii) maintain the records and accounts of the Franchisee to the standards of the Franchisor. Franchisor reserves the right to require Franchisee hire an outside accounting or bookkeeping firm to maintain the records and accounts of the Franchisee should it find, in its sole discretion, that Franchisee is not maintaining the records and accounts in accordance with the standards of the Franchisor. Franchisee is required to use the bookkeeping service that Franchisor chooses.
- 11.2.2. Franchisee must maintain, for at least five fiscal years from their preparation, complete financial records for the operation of the Kidokinetics Business in accordance with the then current Internal Revenue Service Publication and must provide Franchisor, at Franchisor's request, with: (i) a weekly Sales Report signed by Franchisee and in the form Franchisor specifies that contains the sales information pertaining to the preceding week including, without limitation, a summary of all monies received during the relevant period, any other additional information which Franchisor deems necessary to properly evaluate Franchisee's progress; (ii) a quarterly income statement and profit and loss statement, reflective of the three individual months in the quarter, in a format specified by Franchisor, including a standard chart of accounts, within 20 days after the end of each quarter; (iii) annual financial reports and operating statements in the form Franchisor specifies within 50 days after the close of each of Franchisee's fiscal years; (iv) state and local sales tax returns or reports and federal, state and local income tax returns for each year in which Franchisee's Kidokinetics Business is operated, within 30 days after their timely completion; and (v) such other reports as Franchisor may from time to time require, in the form and at the time Franchisor prescribes. Franchisee's fiscal year must be on a calendar year basis. To assist Franchisee in recording and keeping accurate and detailed financial records for reports and tax returns, Franchisor, at Franchisor's discretion, may specify the form in which the business records are to be maintained and provide a uniform set of business records for Franchisee to use. Franchisor will have full access to all of Franchisee's data, system, and related information by means of direct access, whether in person, or by telephone/modem installed and maintained at Franchisee's sole expense.
- 11.2.3. The financial statements required hereunder are in such form and contain such information as Franchisor may from time to time reasonably designate.
- 11.2.4. Franchisor has the right, at all reasonable times, to examine or audit, at its expense, Franchisee's books, records, and tax returns.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees must adhere to specific accounting procedures and reporting requirements. Kidokinetics franchisees are obligated to maintain complete and accurate financial records of their business transactions, utilizing the accounting procedures that Kidokinetics specifies. This includes purchasing required computer systems and maintaining records and accounts to Kidokinetics's standards. Kidokinetics retains the right to mandate that franchisees hire an outside accounting or bookkeeping firm if the franchisor determines that the franchisee is not maintaining records appropriately. Furthermore, Kidokinetics requires franchisees to use the bookkeeping service that the franchisor chooses.
Kidokinetics franchisees must maintain financial records for at least five fiscal years, following the guidelines of the current Internal Revenue Service Publication. They must provide Kidokinetics with several reports, including a weekly Sales Report, quarterly income and profit and loss statements (reflective of the three individual months in the quarter), and annual financial reports and operating statements. These financial documents must be in a format specified by Kidokinetics, including a standard chart of accounts. Additionally, franchisees must submit state and local sales tax returns, as well as federal, state, and local income tax returns, within specified timeframes. The franchisee's fiscal year must be on a calendar year basis.
Kidokinetics also requires franchisees to make any and all upgrades to equipment, machinery, tools, including, but not limited to, QuickBooks Pro online or such other management software as Kidokinetics designates, and computer hardware (including an office computer, a tablet computer, a telephone, a fax machine, and a smartphone), software and applications, and any technology used in conjunction therewith, as Franchisor requires in its sole and absolute discretion. Franchisees must also provide, upon request by Kidokinetics, user names and passwords for services used in the operation of the Kidokinetics Business, including, but not limited to, social media accounts, and QuickBooks. This does not include any passwords to online banking or other financial accounts.