How does the insufficient funds fee for a Kidokinetics franchise relate to the bank's charges?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
ghest rate permitted by law, whichever is lower.
- 5.6.3. Insufficient Funds Fee. In the event any of Franchisee's checks are returned, or an electronic funds transfer from Franchisee's bank account is denied for insufficient funds, Franchisee will pay Franchisor, in addition to the amount due, an Insufficient Funds Fee of fifty dollars ($50.00) or an amount equal to that charged to Franchisor by the bank, whichever is higher, per occurrence. This Insufficient Funds Fee is reasonably related to Franchisor's costs resulting from the delayed and declined payment, is not a penalty, and is in addition to any other rem
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, if a franchisee's check is returned or an electronic funds transfer is denied due to insufficient funds, the franchisee must pay Kidokinetics an insufficient funds fee. This fee is either $50.00 or the amount the bank charges Kidokinetics, whichever is higher.
This policy ensures that Kidokinetics is compensated for any bank fees they incur due to the franchisee's insufficient funds. It also covers Kidokinetics's administrative costs associated with the declined payment. The insufficient funds fee is not considered a penalty but rather a reimbursement for costs incurred due to the delayed or declined payment.
For a prospective Kidokinetics franchisee, this means they need to ensure they maintain sufficient funds in their account to cover all payments to Kidokinetics. Failure to do so will result in additional fees, potentially impacting their profitability. This is a fairly standard practice in franchising, as franchisors seek to protect themselves from the costs associated with processing failed payments.