What happens if a Kidokinetics franchisee wants to use an unapproved item or service?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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If you want to use any item or service in establishing or operating your Kidokinetics Business that we have not approved (for items or services that require supplier approval), you must first send us sufficient information, specifications or samples for us to determine whether the item or service complies with our standards and specifications or whether the supplier meets our approved supplier criteria. You must reimburse us for all of our reasonable expenses in connection with determining whether we will approve an item, service or supplier. We will decide within a reasonable time (usually 30 days) after receiving the required information whether you may purchase or lease the items or services or if you may purchase from the supplier. Our approval may later be withdrawn based on the supplier's performance, changes in our specifications, standards or requirements, or for other reasons.
Our approval process generally focuses on the supplier's dependability, general reputation and ability to provide sufficient quantity of product or services, and the products' or services' prices and quality. Our standards, specifications and other criteria for supplier or distributor approval have been developed by us, our principals and our affiliates through the expenditure of extensive work and time and are considered confidential information. We do not make our standards and specifications or our other criteria for supplier
or distributor approval available to our franchisees or approved suppliers. Our specifications, standards and requirements may, on occasion, change, in our sole discretion.
We reserve the right to limit the number of potential suppliers we may consider for approval and for some categories of products or services, we may designate a third party or ourselves as exclusive suppliers.
We may, but are not required to, negotiate purchase arrangements with suppliers and distributors for the benefit of franchisees and the System as a whole, and we may receive rebates or volume discounts from our purchase of equipment and supplies that we resell to you.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, if a franchisee wishes to use an item or service not already approved, they must first submit sufficient information, specifications, or samples to Kidokinetics for evaluation. The franchisee is responsible for reimbursing Kidokinetics for all reasonable expenses incurred during the approval process. Kidokinetics will then decide, typically within 30 days of receiving the necessary information, whether to approve the item, service, or supplier. However, Kidokinetics retains the right to withdraw approval later based on the supplier's performance, changes in specifications, standards, requirements, or other reasons.
The approval process generally focuses on the supplier's dependability, reputation, ability to provide sufficient quantities, and the prices and quality of their products or services. Kidokinetics considers its standards, specifications, and other criteria for supplier or distributor approval as confidential information, developed through extensive work and time by Kidokinetics, its principals, and affiliates. These standards and specifications are not made available to franchisees or approved suppliers and may change at Kidokinetics's discretion.
It is important to note that Kidokinetics estimates a significant portion of a franchisee's expenditures, approximately 30% to 80% during establishment and 25% to 30% on an ongoing basis, will be directed towards Kidokinetics or approved suppliers. While Kidokinetics does not offer material benefits for using approved sources, using unapproved products or suppliers in violation of the Franchise Agreement can lead to termination of the agreement, among other potential consequences. This underscores the importance of adhering to Kidokinetics's approved supplier network and approval processes to maintain compliance and avoid potential penalties.