Does a Kidokinetics franchisee agree to pay all fees associated with the use of Required Software?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall pay all fees and expenses for technology required by this Agreement, including but not limited to, the costs of computer hardware and software, Internet access, license fees, help desk fees, licensing or user-based fees for a franchise portal or a benchmarking platform, web page design, and fees related to exposure on Franchisor's website.
- 5.4. Business Coaching and Training Services.
If this Franchise Agreement is for Franchisee's first Kidokinetics Business or if Franchisor approves Franchisee's request to do so in connection with the launch of an additional Kidokinetics Business, Franchisor or its affiliate will provide certain in-person business coaching and training services initial launch of the Kidokinetics Business.
Franchisee shall pay a fee of $7,500.
This fee is due upon signing the Franchise Agreement and is not refundable under any circumstances.
Franchisor will determine when this service within 6 months after the Kidokinetics Business opens, subject to the parties' mutual availability.
- 5.5. Recurring Fees.
Kidokinetics
5.5.1. Royalty. On Wednesday of each week (or such other date as we designate, you agree to pay us a royalty fee equal to eight percent (8%) of Gross Sales during the previous week (Monday through Sunday) ("Percentage Royalty"). At the end of the month, if the Percentage Royalty for that month is less than the minimum royalty in the chart below, you will pay us the difference ("Minimum Royalty") to meet your Minimum Royalty obligation. You will receive a 90-day grace period ("Grace Period"), beginning on the day you successfully complete the initial training class, before you are required to begin paying the Minimum Royalty, but the Percentage Royalty will be in effect immediately. The Minimum Royalty is as follows:
B. FEES
- (a) Initial KIDOLINK Software License Fee. Franchisee must pay to Franchisor $3,000 for Franchisee's first Franchised Business and $1,000 for Franchisee's second or greater Franchised Business as a one-time Initial Software License Fee, due on the execution of this Agreement (unless), for the use of the KIDOLINK Software.
- (b) Monthly KIDOLINK Software License Fee. Beginning in the first month Franchisee beings to operate the Franchised Business, Franchisee must pay to Franchisor a continuing Monthly Software License Fee via automatic bank draft for the right to use the KIDOLINK Software. Currently, the continuing Monthly Software License Fee is $475 per month, which Franchisor reserves the right to increase by up to 10% in any calendar year.
Unless notified to discontinue use, Franchisee agrees to continue to use the KIDOLINK Software and any updated versions of it as long as Franchisor requires it.
- (d) Disabling of the KIDOLINK Software.
Franchisee understands that Franchisor may include a feature in the KIDOLINK Software that will cause the KIDOLINK Software to automatically cease to operate in whole or in part in the event Franchisee materially breaches this Agreement, the Franchise Agreement, or fails in a timely manner to (i) submit to Franchisor the reports required by Franchisor; (ii) pay to Franchisor the required fees under this Agreement; or (iii) pay to Franchisor the Royalty Fee or any other amounts due to Franchisor under the Franchise Agreement.
Franchisor will not be liable to Franchisee for any damages whatsoever that may result directly or indirectly from Franchisor's disabling of the functionality of the KIDOLINK Software pursuant to this Section.
- (f) No Refunds.
Upon the expiration or termination of the license granted hereby, or if the KIDOLINK Software is disabled as described above, Franchisee will not receive any refund of any payments made to Franchisor.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees are responsible for various fees and expenses related to required software and technology. Specifically, a new franchisee must pay a $3,000 "Software License Fee" for the use of Kidokinetics' proprietary software when signing the Franchise Agreement. If the agreement is for an additional Kidokinetics Business, the Software License Fee is reduced to $1,000. Franchisees must also sign a "Software License Agreement."
In addition to the initial fee, franchisees must pay a continuing Monthly Software License Fee for the right to use the KIDOLINK Software, which is currently $475 per month. Kidokinetics retains the right to increase this monthly fee by up to 10% in any calendar year. Franchisees are also responsible for all fees and expenses for technology required by the Franchise Agreement, including the costs of computer hardware and software, Internet access, license fees, help desk fees, licensing or user-based fees for a franchise portal or a benchmarking platform, web page design, and fees related to exposure on Kidokinetics' website.
These financial obligations highlight the importance of carefully considering the ongoing costs associated with technology and software when evaluating a Kidokinetics franchise. The franchisee is responsible for maintaining adequate hardware and software to access the Internet at the speed required by Kidokinetics and must maintain an electronic mail account with an Internet service provider acceptable to Kidokinetics. The franchisee must also read all electronic mail related to the Kidokinetics Business on a daily basis and shall accept and acknowledge receipt of all electronic mail sent by Kidokinetics.
Kidokinetics may include a feature in the KIDOLINK Software that will cause the KIDOLINK Software to automatically cease to operate in whole or in part in the event Franchisee materially breaches this Agreement, the Franchise Agreement, or fails in a timely manner to (i) submit to Franchisor the reports required by Franchisor; (ii) pay to Franchisor the required fees under this Agreement; or (iii) pay to Franchisor the Royalty Fee or any other amounts due to Franchisor under the Franchise Agreement. Franchisee will not receive any refund of any payments made to Franchisor upon the expiration or termination of the license.