What must a Kidokinetics franchisee do if there is a change in their banking relationship?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 5.8. Method of Payment. Franchisee will, together with the submission of the Gross Sales Report, pay to Franchisor each Wednesday, via an electronic funds transfer program ("EFT Program") the Royalty and the Brand Development Fund, as defined and more particularly described in Article 13, then due. Franchisee must deposit all revenues from the operation of Franchisee's Kidokinetics Business into one bank account within three days of receipt, including cash, checks, and credit card receipts. Before opening Franchisee's Kidokinetics Business, Franchisee must provide Franchisor with Franchisee's bank name, address and account number, a voided check from the bank account, and sign and give to Franchisor and Franchisee's bank, all documents, including Attachment "G" to this Agreement, necessary to effectuate the EFT Program and Franchisor's ability to withdraw funds from such bank account via electronic funds transfer. Franchisee will immediately notify Franchisor of any change in Franchisee's banking relationship, including changes in account numbers. Franchisor reserves the right to require Franchisee to pay any fees due under this Agreement by such other means as Franchisor may specify from time to time. Franchisee's failure to allow electronic funds transfers on an ongoing basis is a breach of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, franchisees must immediately inform Kidokinetics of any changes to their banking relationship, including changes in account numbers. This requirement is tied to the electronic funds transfer (EFT) program used for royalty and Brand Development Fund payments.
Before opening their Kidokinetics business, franchisees must provide Kidokinetics with their bank name, address, account number, and a voided check. They must also sign and provide all necessary documents to both Kidokinetics and their bank to enable electronic fund transfers. This initial setup ensures that Kidokinetics can withdraw funds electronically for ongoing fees.
The obligation to notify Kidokinetics of banking changes is crucial because Kidokinetics uses the EFT program to collect weekly royalty and Brand Development Fund payments. Failure to maintain electronic funds transfers is considered a breach of the franchise agreement. This requirement ensures Kidokinetics can reliably collect its fees, which is a common practice in franchising to streamline payment processes and maintain consistent revenue flow.
In practical terms, if a Kidokinetics franchisee changes banks or account numbers, they must promptly update Kidokinetics with the new information to avoid any disruption in payments and potential breach of contract. This includes providing the new bank details and any necessary documentation to facilitate the continuation of the EFT program.