Does Kidokinetics assume a fiduciary duty to franchisees regarding the Brand Development Fund?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
We assume no fiduciary duty to you or other direct or indirect liability or obligation to collect amounts due to the Brand Development Fund or to maintain, direct or administer the Brand Development Fund. Any unused funds that were collected in any calendar year will be applied to the following year's funds, and we reserve the right to contribute or loan additional funds to the Brand Development Fund on any terms we deem reasonable.
The Brand Development Fund is not audited. Upon your written request, we will make available an annual accounting for the Brand Development Fund that shows how the Brand Development Fund proceeds have been spent for the previous year. During our fiscal year ended December 31, 2023, we spent 100% of the Brand Development Fund Contributions on administration.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 26–34)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, Kidokinetics does not assume a fiduciary duty to franchisees regarding the Brand Development Fund. The document explicitly states that Kidokinetics assumes no fiduciary duty to franchisees in relation to the Brand Development Fund.
Kidokinetics retains complete discretion over how the Brand Development Fund is utilized, including for local, regional, or national marketing, or any expenditure deemed necessary to promote the Kidokinetics system or brand. This includes a wide range of activities from developing advertising materials and managing social media to conducting market research and improving the system. Kidokinetics is not obligated to spend any specific amount on advertising in a franchisee's geographical area and does not guarantee any direct benefit to franchisees from the Brand Development Fund expenditures.
Franchisees are required to contribute 2% of their weekly Gross Sales to the Brand Development Fund. While Kidokinetics will separately account for these contributions, they are not required to segregate the funds from their other monies. Although the Brand Development Fund is not audited, Kidokinetics will provide an annual accounting of the fund's expenditures upon written request, detailing how the proceeds were spent in the previous year. For the fiscal year ended December 31, 2023, 100% of the Brand Development Fund Contributions were spent on administration.