What is the alternative calculation for the Kidokinetics Local Advertising spend?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
ER FEES
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | The greater of 8% of Gross Sales (2) or the "Minimum Royalty" (3) | Due on Wednesday of\neach week for percentage-based Royalty; Monthly for the Minimum Royalty | The "Royalty" is based on "Gross Sales" during the previous week. Your Royalty is an ongoing payment that allows you to use the Marks and the intellectual property of the System and pays for our ongoing support and assistance. |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees are required to spend on local advertising, with the amount calculated as the greater of two options. The first option is a fixed amount of $500 per month. The second option is 2% of Gross Sales per month, calculated on a rolling 12-month average. Franchisees must spend whichever of these two amounts is higher.
This means that in months where 2% of a franchisee's average gross sales over the past year exceeds $500, they will be required to spend the higher percentage-based amount on local advertising. Conversely, if 2% of their average gross sales is less than $500, they only need to spend $500 for that month.
This requirement ensures that Kidokinetics franchisees consistently invest in local marketing efforts. The rolling average calculation means that franchisees need to monitor their gross sales to accurately budget for their monthly local advertising spend. This structure allows for flexibility based on revenue while maintaining a minimum advertising threshold.