Does the Kidokinetics franchisor have the right to retain the whole or any partial amount of discounts from suppliers?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.4. Volume Rebates.
If Franchisor receives any cash rebates, volume discounts, concessions, advertising allowances, or discount bonuses (collectively "Discounts"), whether by way of cash, kind or credit, from any manufacturer or supplier designated by Franchisor, whether or not on account of purchases made (i) by Franchisor for its own account or for Franchisee's account, or franchisees generally, or (ii) by Franchisee directly for its own account, Franchisor reserves the right to retain the whole or any partial amount of such Discounts.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics reserves the right to retain all or part of any discounts it receives from designated manufacturers or suppliers. These discounts can be in the form of cash, in-kind benefits, or credits. This applies whether Kidokinetics makes purchases for its own account, for the franchisee's account, or for franchisees in general. It also applies if the franchisee makes purchases directly for their own account.
This policy means that while a Kidokinetics franchisee may be purchasing supplies through a designated supplier, any potential cost savings or rebates negotiated by Kidokinetics may not be fully passed on to the franchisee. Kidokinetics retains the discretion to keep these discounts, which could impact the franchisee's overall cost of goods and profitability.
As a prospective franchisee, it is important to understand how these retained discounts are used by Kidokinetics. While the FDD specifies that Kidokinetics can retain these discounts, it does not detail how these funds are utilized. A potential franchisee should inquire about the typical amount of discounts retained, how these funds benefit the franchise system, and whether there is any transparency regarding the use of these retained discounts. Understanding these aspects can help a franchisee assess the true cost of supplies and the overall financial implications of this policy.