What is the formula for calculating the Kidokinetics Local Advertising fee?
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 pay a local advertising fee. This fee is calculated monthly and is the greater of two amounts: a flat $500 per month, or 2% of the franchisee's Gross Sales per month, calculated on a rolling 12-month average.
This means that a new Kidokinetics franchisee will initially pay $500 per month for local advertising. As their Gross Sales increase, the 2% of Gross Sales calculation will likely exceed the $500 minimum, and the franchisee's local advertising fee will then be based on that percentage. The rolling 12-month average ensures that the fee reflects the franchisee's recent sales performance, smoothing out any seasonal fluctuations.
The FDD stipulates that the franchisee must spend this amount on local advertising and marketing purposes, implying that Kidokinetics requires franchisees to actively invest in promoting their business within their local market. This is a common practice in franchising, as local advertising helps to build brand awareness and drive customer traffic to individual franchise locations. Franchisees should ensure they have a clear understanding of what constitutes acceptable local advertising expenses, as defined by Kidokinetics.