What happens to unused funds collected in the Kidokinetics Brand Development Fund in any calendar year?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
We assume no fiduciary duty to you or other direct or indirect liability or obligation to collect amounts due to the Brand Development Fund or to maintain, direct or administer the Brand Development Fund. Any unused funds that were collected in any calendar year will be applied to the following year's funds, and we reserve the right to contribute or loan additional funds to the Brand Development Fund on any terms we deem reasonable.
The Brand Development Fund is not audited. Upon your written request, we will make available an annual accounting for the Brand Development Fund that shows how the Brand Development Fund proceeds have been spent for the previous year. During our fiscal year ended December 31, 2023, we spent 100% of the Brand Development Fund Contributions on administration.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 26–34)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, any unused funds collected for the Brand Development Fund in a calendar year will be applied to the following year's funds. Kidokinetics also retains the right to contribute or loan additional funds to the Brand Development Fund under terms they deem reasonable.
This means that if the Brand Development Fund has a surplus at the end of the year, those funds won't be returned to franchisees or distributed in another way. Instead, they will be carried over and used for marketing and development initiatives in the subsequent year. This is a fairly common practice in franchising, as it allows for the accumulation of resources for larger or longer-term projects.
Kidokinetics does not have a fiduciary duty to franchisees regarding the Brand Development Fund. While the Brand Development Fund is not audited, Kidokinetics will provide an annual accounting of the Brand Development Fund's expenditures from the previous year upon written request. For the fiscal year ending December 31, 2023, 100% of the Brand Development Fund Contributions were spent on administration.
As a prospective franchisee, it's important to understand that you will not have direct control over how the Brand Development Fund is spent, but you can request an accounting of how the funds were used. Given that 100% of the funds were used for administration in 2023, a prospective franchisee may want to inquire about the specific administrative costs and how they benefit the franchise system.