Does Kidokinetics reserve the right to designate itself as an exclusive supplier?

According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics retains the right to designate itself or a third party as the exclusive supplier for certain categories of products or services. This means that as a franchisee, you may be required to purchase specific items only from Kidokinetics or a designated supplier.

This arrangement allows Kidokinetics to control the quality and consistency of products and services used throughout the franchise system. While this can help maintain brand standards, it also limits a franchisee's ability to shop around for better prices or alternative products. Franchisees are required to use designated computer hardware and software, including a point-of-sale system, and obtain related services from specified suppliers. The FDD also states that Kidokinetics is an approved supplier of logoed items, such as uniforms and packaging supplies, but may approve alternate suppliers at its discretion.

Kidokinetics estimates that 30% to 80% of a franchisee's initial expenditures and 25% to 30% of ongoing expenditures will be from Kidokinetics or approved suppliers. Purchases from unapproved suppliers can result in termination of the Franchise Agreement. Kidokinetics may receive rebates from suppliers based on franchisee purchases, and they are not obligated to pass these rebates on to franchisees. During the fiscal year ended December 31, 2023, Kidokinetics derived $511,370 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.

Prospective franchisees should carefully consider the implications of these restrictions, including the potential impact on their costs and flexibility. It is important to discuss with Kidokinetics the specific products and services for which they or a third party will be the exclusive supplier, and to understand the criteria for approving alternate suppliers.