Does Kidokinetics or its affiliates currently act as approved suppliers of any item?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Business.
You will also pay us a Software License Fee of $3,000 prior to opening for our proprietary KIDOLINK software ($1,000 for additional Kidokinetics Businesses). Except as disclosed above, as of the Issuance Date of this Franchise Disclosure Document, neither we, nor our affiliates are approved suppliers of any item, although we may become one in the future. Some of our officers own an equity interest in us, an approved supplier.
You must use the computer hardware and software, including the point-of-sale system that we periodically designate to operate your Kidokinetics Business. You must obtain the computer hardware, software licenses, maintenance and support services and other related services that meet our specifications from the suppliers we specify. You must pay the then-current fees to approved suppliers for certain technology business solutions that will support your business efficiencies, which may include phone systems, scheduling software, bookkeeping services and any other solutions we may require from time to time in the Franchise Operations Manual.
You must obtain the insurance coverage required under the Franchise Agreement, as follows: (i) comprehensive general liability insurance in the amount of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, or in the event you lease commercial office space or storage space, such amount as required by your lease or state laws; (ii) umbrella excess liability coverage in an amount equal to $1,000,000 combined single limit coverage; (iii) automobile insurance in the amount of at least a combined single limit for bodily and property damage of $100,000, or greater if required by state law; and, if you have employees, statutory worker's compensation insurance in the limits required by state law; (iv) hired-non owned automobile insurance; (v) crime insurance for employee dishonesty in the amount of $5,000 combined single limit; (vi) sexual abuse and molestation coverage; (vii) accident
policy; and (viii) workers compensation with $1,000,000 limits or such additional limits as required by state law.
The insurance company must be authorized to do business in the state where your Kidokinetics Business is located and must be approved by us. It must also be rated "A" or better by A.M. Best & Company, Inc. We may periodically increase the amount of coverage required under these insurance policies and/or require different or additional insurance coverage at any time. All insurance policies must name us and any affiliates we designate as additional named insured parties. Your policy must provide that the insurer will not cancel or materially alter the policies without giving us at least 30 days' prior written notice.
We estimate that approximately 30% to 80% of your expenditures for leases and purchases in establishing your Kidokinetics Business will be from us or from other approved suppliers or under our specifications. We estimate that approximately 25% to 30% of your expenditures on an ongoing basis will be from us or from other approved suppliers or under our specifications.
We do not provide material benefits to you (such as renewal rights or the right to open additional Kidokinetics Businesses) based on whether or not you purchase through the sources we designate or approve; however, purchases of unapproved products or from unapproved suppliers in violation of the Franchise Agreement will entitle us to, among other things, terminate the Franchise Agreement. We and our affiliates may receive rebates from some suppliers based on your purchase of products and services and we have no obligation to pass them on to our franchisees or use them in any particular manner.
During the fiscal year ended December 31, 2023, we derived $511,370 in revenue from required franchisee purchases in the form of sales from shirts and other apparel. This represents 14.5% of our total revenue of $3,509,206.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, neither Kidokinetics nor its affiliates are approved suppliers of any item as of the issuance date of the document, although they may become one in the future. However, Kidokinetics is an approved supplier of the proprietary business management software, and they or their affiliate are the exclusive provider of Enhanced Business Coaching and Training Services and marketing materials, including the Initial Marketing Package. Kidokinetics is also an approved supplier of logoed items like uniforms and packaging supplies, though they may approve alternate suppliers at their discretion. Some officers of Kidokinetics own an equity interest in an approved supplier.
Kidokinetics requires franchisees to operate their businesses according to the Kidokinetics system and specifications, which includes purchasing or leasing products, services, supplies, equipment, computer hardware and software, and inventory from designees, approved suppliers, or Kidokinetics and its affiliates. Franchisees must use designated computer hardware and software, including a point-of-sale system, and obtain related services from specified suppliers. They must also pay fees to approved suppliers for technology business solutions like phone systems and scheduling software.
Kidokinetics estimates that 30% to 80% of a franchisee's initial expenditures and 25% to 30% of ongoing expenditures will be from Kidokinetics or approved suppliers. During the fiscal year ended December 31, 2023, Kidokinetics derived $511,370 in revenue from required franchisee purchases, specifically from sales of shirts and apparel, which represented 14.5% of their total revenue of $3,509,206. Kidokinetics and its affiliates may also receive rebates from suppliers based on franchisee purchases, which they are not obligated to pass on to franchisees.
If a franchisee wants to use an unapproved item or service, they must submit it to Kidokinetics for approval and reimburse Kidokinetics for any expenses incurred during the approval process. Kidokinetics's approval process focuses on the supplier's dependability, reputation, ability to provide sufficient quantities, and the product's or service's price and quality. Kidokinetics does not provide material benefits to franchisees based on whether they purchase from approved sources, but purchasing from unapproved sources can result in termination of the Franchise Agreement.