Is there a maximum limit to the amount Kidokinetics can charge for the Brand Development Fund?
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, payable weekly. The FDD does not specify a maximum limit on the amount Kidokinetics can charge for the Brand Development Fund. This means the contribution amount will fluctuate directly with your Gross Sales.
As a Kidokinetics franchisee, you should be aware that this 2% contribution could increase over time if your Gross Sales increase. While the FDD doesn't explicitly state a maximum limit, it's important to understand how this percentage-based fee can impact your overall costs, especially as your business grows.
Franchisors often use brand development funds for marketing and advertising efforts to promote the brand. Since the Brand Development Fund can be used for any purpose Kidokinetics determines, prospective franchisees should inquire about how these funds have been used in the past and what plans exist for future use. Understanding the franchisor's strategy for the fund can help a franchisee assess the potential benefits of this ongoing contribution.
It is also important to note that the Brand Development Fund is separate from the Local Advertising requirement, which is the greater of $500 per month or 2% of Gross Sales per month on a rolling 12-month average. This means franchisees must budget for both the Brand Development Fund contribution and their local advertising expenses.