For what purposes can the Kidokinetics Brand Development Fund be used?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
ER FEES
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | The greater of 8% of Gross Sales (2) or the "Minimum Royalty" (3) | Due on Wednesday of\neach week for percentage-based Royalty; Monthly for the Minimum Royalty | The "Royalty" is based on "Gross Sales" during the previous week. Your Royalty is an ongoing payment that allows you to use the Marks and the intellectual property of the System and pays for our ongoing support and assistance. See Note 3 for a breakout of the Minimum Royalty by timeframe of operation. |
| Brand Development | 2% of Gross Sales | Weekly | You must pay us a brand development fund contribution of 2% of Gross Sales at the same time as the Royalty. We may use the brand development fund for any purpose we determine. |
| Fund Contribution | |||
| Technology Fee | The then-current fee (currently $475 per month with an additional fee of $6 per month if you request additional email addresses) | Monthly | This fee covers certain technologies used in the operation of your Kidokinetics Business and includes up to four e-mail addresses, our KIDOLINK software, access to our Kidokinetics workspace on Slack, and up to two seats on Monday.com, our workflow management and customer relationship management tool. We may charge an additional fee for more than four e-mail addresses (currently, $6 per month per email). This fee may include fees paid to third-party vendors and it may be adjusted to reflect their price increases. This fee will cover up to four Kidokinetics Businesses so long as they are operated by the same legal entity and have adjacent territories. You will also be responsible for any increase in fees that result from any upgrades, modifications or additional services or software. |
| Local Advertising | The greater of $500 per month, or 2% of Gross Sales per month on a rolling 12- month average | Monthly | You must spend this amount on local advertising and marketing purposes. |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the Brand Development Fund contribution is 2% of Gross Sales, paid weekly. Kidokinetics retains full discretion over how these funds are spent, stating explicitly that they "may use the brand development fund for any purpose we determine."
This broad discretion means Kidokinetics franchisees have limited control or input into how the Brand Development Fund is utilized. While the name suggests marketing and brand-building activities, the FDD provides no guarantees or restrictions on the fund's use. This is a notable risk for franchisees, as they are obligated to contribute 2% of their Gross Sales without assurance that the funds will directly benefit their individual businesses or local markets.
In the franchise industry, it is relatively common for franchisors to have significant control over brand development funds. However, some franchisors provide more transparency or allow franchisee advisory councils to have input on fund allocation. The Kidokinetics FDD does not specify any such mechanisms for franchisee involvement. Prospective franchisees should inquire about Kidokinetics's historical use of the Brand Development Fund and their strategic plans for its future allocation to better understand how their contributions will be used.