If Kidokinetics acts as an intermediary for recurring fees, does Kidokinetics assume any liability?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees to pay all current obligations and liabilities to suppliers, lessors, and creditors on a timely basis.
Franchisee agrees to indemnify Franchisor in the event that Franchisor is held responsible for debts owed by Franchisee if Franchisor elects to pay any of Franchisee's obligations in order to preserve the relationship between any System suppliers and System franchisees.
Franchisee agrees to make prompt payment of all federal, state and local taxes, including individual and corporate taxes, sales and use taxes, franchise taxes, gross receipts taxes, employee withholding taxes, FICA taxes,
personal property and real estate taxes arising from Franchisee's operation of the Kidokinetics Business. Franchisee agrees to indemnify Franchisor in the event that Franchisor is held responsible for these taxes.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, franchisees are responsible for paying their obligations to suppliers, lessors, and creditors. However, if Kidokinetics elects to pay any of the franchisee's obligations to maintain relationships with system suppliers and franchisees, the franchisee agrees to indemnify Kidokinetics. This means the franchisee will reimburse or compensate Kidokinetics for any costs or liabilities Kidokinetics incurs as a result of paying those debts.
Similarly, the franchisee is responsible for the prompt payment of all federal, state, and local taxes, including income, sales, and employment taxes, arising from the operation of the Kidokinetics business. The franchisee agrees to indemnify Kidokinetics if Kidokinetics is held responsible for these taxes. This protects Kidokinetics from potential tax liabilities incurred by the franchisee's business operations.
In practical terms, this means that while Kidokinetics may, in certain circumstances, act as an intermediary by paying a franchisee's debts or taxes, the franchisee ultimately bears the financial responsibility. The franchisee must reimburse Kidokinetics for any such payments, ensuring that Kidokinetics does not assume any long-term liability for the franchisee's financial obligations. This arrangement is designed to protect Kidokinetics' relationships with suppliers and ensure compliance with tax laws while maintaining the franchisee's accountability for their business's financial health.