Is Kidokinetics required to segregate Brand Development Fund contributions from its other monies?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
ment Fund
The brand development fund ("Brand Development Fund") is for marketing, developing, and promoting the System, the Marks and Kidokinetics Franchises. You must pay 2% of your weekly Gross Sales to the Brand Development Fund ("Brand Development Fund Contribution"). Each franchisee will be required to contribute to the Brand Development Fund, but certain franchisees may contribute on a different basis depending on when they signed their Franchise Agreement. Kidokinetics Businesses owned by us will contribute to the Brand Development Fund on the same basis as franchisees, except for one existing affiliate owned Kidokinetics Business.
The Brand Development Fund will be administered by us, or our affiliate or designees, at our discretion, and we may use a professional advertising agency or media buyer to assist us. We will separately account for all of the Brand Development Fund Contributions that we administer; however, we are not required to segregate any of the funds from our other monies.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 26–34)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics is not required to segregate Brand Development Fund contributions from its other monies. The Brand Development Fund is used for marketing, developing, and promoting the Kidokinetics system, trademarks, and franchises. Franchisees are required to pay 2% of their weekly Gross Sales to the Brand Development Fund.
Kidokinetics has the discretion to administer the Brand Development Fund, and may use a professional advertising agency or media buyer to assist them. While Kidokinetics will separately account for all Brand Development Fund contributions, they are not required to keep these funds separate from their other monies.
This arrangement means that while Kidokinetics will track the Brand Development Fund money separately for accounting purposes, it is not obligated to hold the funds in a completely separate bank account. This could give Kidokinetics more flexibility in managing its overall cash flow, but it also means that the Brand Development Fund contributions are not legally protected from Kidokinetics's other business liabilities.