What reports must a Kidokinetics franchisee submit to avoid the KIDOLINK Software being disabled?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee understands that Franchisor may include a feature in the KIDOLINK Software that will cause the KIDOLINK Software to automatically cease to operate in whole or in part in the event Franchisee materially breaches this Agreement, the Franchise Agreement, or fails in a timely manner to (i) submit to Franchisor the reports required by Franchisor; (ii) pay to Franchisor the required fees under this Agreement; or (iii) pay to Franchisor the Royalty Fee or any other amounts due to Franchisor under the Franchise Agreement.
Franchisee agrees to: (i) purchase the computer systems in accordance with the requirements of this Agreement; and (ii) maintain the records and accounts of the Franchisee to the standards of the Franchisor.
- 11.2.2.
Franchisee must maintain, for at least five fiscal years from their preparation, complete financial records for the operation of the Kidokinetics Business in accordance with the then current Internal Revenue Service Publication and must provide Franchisor, at Franchisor's request, with: (i) a weekly Sales Report signed by Franchisee and in the form Franchisor specifies that contains the sales information pertaining to the preceding week including, without limitation, a summary of all monies received during the relevant period, any other additional information which Franchisor deems necessary to properly evaluate Franchisee's progress; (ii) a quarterly income statement and profit and loss statement, reflective of the three individual months in the quarter, in a format specified by Franchisor, including a standard chart of accounts, within 20 days after the end of each quarter; (iii) annual financial reports and operating statements in the form Franchisor specifies within 50 days after the close of each of Franchisee's fiscal years; (iv) state and local sales tax returns or reports and federal, state and local income tax returns for each year in which Franchisee's Kidokinetics Business is operated, within 30 days after their timely completion; and (v) such other reports as Franchisor may from time to time require, in the form and at the time Franchisor prescribes.
Franchisee's fiscal year must be on a calendar year basis.
Franchisee agrees, acknowledges and understands that use of the KIDOLINK Software is for the purposes of assisting Franchisee with maintenance of certain books, records and reports useful to Franchisee and which may be required pursuant to the Franchise Agreement between Franchisee and Franchisor.
The KIDOLINK Software is not intended, and Franchisor specifically disclaims any representation or warranty regarding use of the KIDOLINK Software, to produce records or reports that comply with generally accepted accounting principles ("GAAP") or Internal Revenue Service ("IRS") policies and guidelines.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, to prevent the KIDOLINK Software from being disabled, a franchisee must submit the reports required by the franchisor in a timely manner. The franchisor may include a feature in the KIDOLINK Software that will cause the KIDOLINK Software to automatically cease to operate in whole or in part if the franchisee fails to submit the required reports.
Specifically, Kidokinetics franchisees must provide the franchisor with several financial reports. These include a weekly Sales Report, quarterly income and profit and loss statements, annual financial reports and operating statements, and state and local sales tax returns or reports, as well as federal, state and local income tax returns. The weekly sales report must be signed by the franchisee and include sales information pertaining to the preceding week, summarizing all monies received during that period, and any other additional information which the franchisor deems necessary to properly evaluate the franchisee's progress.
The quarterly income statement and profit and loss statement must reflect the three individual months in the quarter, be in a format specified by Kidokinetics, and include a standard chart of accounts, submitted within 20 days after the end of each quarter. Annual financial reports and operating statements must be in the form Kidokinetics specifies and submitted within 50 days after the close of the franchisee's fiscal year. Tax returns must be provided within 30 days after their timely completion. Additionally, franchisees must submit any other reports that Kidokinetics may require from time to time, in the form and at the time Kidokinetics prescribes. The franchisee's fiscal year must be on a calendar year basis.
It is important to note that the KIDOLINK Software is intended to assist franchisees with maintaining certain books, records, and reports, but it is the franchisee's sole responsibility to comply with all applicable legal requirements related to generally accepted accounting principles (GAAP) or Internal Revenue Service (IRS) policies and requirements. Failing to submit these reports on time is considered a material breach of the Franchise Agreement and could result in the software being disabled, which would disrupt business operations.