What are the ongoing fees for a Kidokinetics franchise (Item 6) and how do they relate to the use of trademarks (Item 13)?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchise Agreement and your payment of the Royalty Fee grant you the non-exclusive right and license to use the System, which includes the use of the Marks. You may also use other future trademarks, service marks, and logos we approve to identify your Kidokinetics Franchise. The Marks and the System are owned by us. We have registrations with the United States Patent and Trademark Office ("USPTO") for the following Marks:
Royalty Fee: The obligation to pay Royalties begins upon completion of your initial training.
You will be required to pay the greater of 8% of Gross Sales or the "Minimum Royalty" (described below).
You will pay 8% of Gross Sales on a weekly basis.
At the end of the month, if the Minimum Royalty amount is greater than the total weekly Royalties paid that month, you will pay us the difference in order to meet your Minimum Royalty obligation.
You will receive a grace period ("Grace Period") before you are required to begin paying Minimum Royalties.
The Grace Period will be for 90 days beginning on the day you successfully complete the initial training and will expire after 90 days.
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the primary ongoing fee is a royalty fee, which is directly tied to the franchisee's right to use Kidokinetics's trademarks and system. The Franchise Agreement grants franchisees the non-exclusive right and license to use the Kidokinetics system, including its trademarks, in exchange for paying the royalty fee. This means that as long as a franchisee is in good standing and pays the required royalty, they are authorized to operate their Kidokinetics business using the brand's established trademarks and operational methods.
The royalty fee is structured as the greater of 8% of Gross Sales or a Minimum Royalty amount. Franchisees pay 8% of Gross Sales weekly. At the end of each month, Kidokinetics compares the total weekly royalties paid to the Minimum Royalty amount. If the Minimum Royalty is higher, the franchisee must pay the difference to meet their obligation. New franchisees receive a 90-day grace period after initial training before they must begin paying the Minimum Royalty.
Kidokinetics retains ownership of all trademarks and the Kidokinetics system. Franchisees must adhere to Kidokinetics's rules when using the trademarks and cannot use the Kidokinetics name or marks as part of a corporate name or with modifying words, designs, or symbols without prior written consent. Franchisees must also indicate in contracts, advertisements, and with a conspicuous sign that they are independently owned and operated licensed franchisees of Kidokinetics. All rights and goodwill from the use of the marks accrue to Kidokinetics. This arrangement is typical in franchising, where the franchisor licenses its brand and system in exchange for ongoing fees and adherence to brand standards.