May Kidokinetics receive rebates or volume discounts from suppliers?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
uppliers.
We may, but are not required to, negotiate purchase arrangements with suppliers and distributors for the benefit of franchisees and the System as a whole, and we may receive rebates or volume discounts from our purchase of equipment and supplies that we resell to you. We currently do not have any purchasing or distribution cooperatives. We do not provide any other material benefits to franchisees for using designated or approved suppliers; however, purchases of unapproved products or from unapproved suppliers in violation of the Franchise Agreement will entitle us to, among other things, terminate the Franchise Agreement. We and our affiliates may receive rebates from some suppliers based on your purchase of products and services and we have no obligation to pass them on to our franchisees or use them in any particular manner. We reserve the right to receive fees or other consideration in exchange for rights licensed or granted, or services rendered to third parties, including vendors. We may derive income, consideration and other benefits from your purchases or lease of any products, services, supplies or other items from us and from approved and designated suppliers. This income may be derived in any form, including as a rebate from various suppliers based on the quantity of System franchisee purchases. We do not guarantee the availability of independent sources of supply for any particular product or service required to establish or operate your Kidokinetics Business.
You will also pay us a Software License Fee of $3,000 prior to opening for our proprietary KIDOLINK software ($1,000 for additional Kidokinetics Businesses). Except as disclosed above, as of the Issuance Date of this Franchise Disclosure Document, neither we, nor our affiliates are approved suppliers of any item, although we may become one in the future. Some of our officers own an equity interest in us, an approved supplier.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics may negotiate purchase arrangements with suppliers and distributors for the benefit of franchisees and the system, and may receive rebates or volume discounts from their purchase of equipment and supplies that they resell to franchisees. Kidokinetics is not required to pass these rebates on to franchisees or use them in any particular manner. Kidokinetics and its affiliates may also receive rebates from some suppliers based on a franchisee's purchase of products and services.
Kidokinetics also reserves the right to receive fees or other consideration in exchange for rights licensed or granted, or services rendered to third parties, including vendors. They may derive income, consideration, and other benefits from a franchisee's purchases or lease of any products, services, supplies, or other items from Kidokinetics and from approved and designated suppliers. This income may be derived in any form, including as a rebate from various suppliers based on the quantity of System franchisee purchases.
For a prospective franchisee, this means that Kidokinetics has the potential to profit from required purchases made by franchisees through designated suppliers. While this is a common practice in franchising, it's important to understand that Kidokinetics is not obligated to share any of these rebates or discounts with its franchisees. This revenue stream is in addition to the $511,370 Kidokinetics derived in revenue from required franchisee purchases in the form of sales from shirts and other apparel, representing 14.5% of their total revenue of $3,509,206 during the fiscal year ended December 31, 2023.