Does Kidokinetics have complete discretion on how the Brand Development Fund will be utilized?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
We have complete discretion on how the Brand Development Fund will be utilized. We may use the Brand Development Fund for local, regional, or national marketing, or any expenditure that we, in our sole discretion, deem necessary or appropriate to promote or improve the System or the Kidokinetics brand. For example, we may use the Brand Development Fund for: (i) developing, maintaining, administering, directing, preparing or reviewing advertising and marketing materials, promotions and programs, including social media management; (ii) public awareness of any of the Marks; (iii) public and consumer relations and publicity; (iv) brand development; (v) research and development of technology, products and services; (vi) website development (including social media) and search engine optimization; (vii) development and implementation of quality control programs; (viii) conducting market research; (ix) changes and improvements to the System; (x) the fees and expenses of any advertising agency we engage to assist in producing or conducting advertising or marketing efforts; (xi) collecting and accounting for Brand Development Fund Contributions; (xii) preparing and distributing financial accountings of the Brand Development Fund; (xiii) conducting quality assurance programs and other reputation management functions; and (xiv) our and our affiliates' expenses associated with direct or indirect labor, administrative, overhead, or other expenses incurred in relation to any of these activities. We may use national and/or regional advertising agencies as the source for our advertising materials, or we may prepare them in-house.
We are not obligated to spend any amount on advertising in the geographical area where you are or will be located. We do not guarantee that advertising expenditures from the Brand Development Fund will benefit you or any other franchisee directly, on a pro rata basis, or at all. We are not obligated to spend any amount on advertising in the geographical area where you are or will be located. We will not use the Brand Development Fund Contributions for advertising that is principally a solicitation for the sale of Franchises, but we reserve the right to include a notation in any advertisement or website indicating "Franchises Available" or similar phrasing.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 26–34)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics has complete discretion regarding the Brand Development Fund's utilization. Kidokinetics may use the fund for local, regional, or national marketing, or any expenditure they deem necessary or appropriate to promote or improve the Kidokinetics system or brand.
Kidokinetics provides examples of potential uses for the Brand Development Fund, including developing advertising and marketing materials, promoting public awareness of the Kidokinetics marks, conducting public and consumer relations, brand development, research and development of technology, website development and search engine optimization, quality control programs, market research, system improvements, fees for advertising agencies, and administrative expenses related to these activities. Kidokinetics is not obligated to spend any amount on advertising in the franchisee's specific geographical area and does not guarantee any direct benefit to the franchisee from these expenditures.
The Brand Development Fund is supported by franchisee contributions of 2% of weekly gross sales. Kidokinetics Businesses owned by Kidokinetics contribute to the Brand Development Fund on the same basis as franchisees, except for one existing affiliate owned Kidokinetics Business. While Kidokinetics will separately account for the Brand Development Fund contributions, they are not required to segregate the funds from their other monies. Any unused funds from a calendar year will be applied to the following year's funds, and Kidokinetics reserves the right to contribute or loan additional funds to the Brand Development Fund on any terms they deem reasonable.
Kidokinetics does not assume a fiduciary duty to franchisees regarding the Brand Development Fund. The Brand Development Fund is not audited, but Kidokinetics will provide an annual accounting of how the funds were spent for the previous year upon written request. In 2023, 100% of the Brand Development Fund Contributions were spent on administration.