Does Kidokinetics offer bookkeeping, information technology, and advisory services to franchisees, including setting up records and advising on income, real estate, and other taxes?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
In allocating the transaction price and recognizing the revenue associated with initial franchise fees, the Company has elected to adopt the practical expedient for private company franchisors outlined in ASC 952-606, Franchisors—Revenue from Contracts with Customers. The practical expedient allows franchisors to account for pre-opening services as a single distinct performance obligation. These pre-opening services include the following:
- Assistance in the selection of a site
- Assistance in obtaining facilities and preparing the facilities for their intended use, including related financing, architectural, and engineering services, and lease negotiation
- Training of the franchisee's personnel or the franchisee
- Preparation and distribution of manuals and similar material concerning operations, administration, and record keeping
- Bookkeeping, information technology, and advisory services, including setting up the franchisee's records and advising the franchisee about income, real estate, and other taxes about local regulations affecting the franchisee's business
- Inspection, testing, and other quality control programs
The Company has determined the fair value of pre-opening services. This amount is recognized upon the deliver of all pre-opening services, which is generally the commencement of operations. The remaining fees are then amortized over the life of the agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics offers bookkeeping, information technology, and advisory services to franchisees. These services include setting up the franchisee's records and advising the franchisee about income, real estate, and other taxes, as well as local regulations affecting the franchisee's business. These services are considered pre-opening services.
Kidokinetics recognizes revenue related to these pre-opening services upon delivery of all such services, which typically occurs when the franchise commences operations. The remaining fees are then amortized over the life of the franchise agreement. This means that Kidokinetics allocates a portion of the initial franchise fee to these pre-opening services.
For a prospective franchisee, this indicates that Kidokinetics provides support in setting up the necessary financial and IT infrastructure, as well as offering advice on tax-related matters and local regulations. This support can be particularly valuable for franchisees who may be new to business ownership or unfamiliar with the specific requirements of operating a Kidokinetics franchise. The franchisee should confirm the extent and duration of these support services during the pre-opening phase.