What are the two options for calculating the Kidokinetics Royalty Fee?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Royalty Fee: The obligation to pay Royalties begins upon completion of your initial training. You will be required to pay the greater of 8% of Gross Sales or the "Minimum Royalty" (described below). You will pay 8% of Gross Sales on a weekly basis. At the end of the month, if the Minimum Royalty amount is greater than the total weekly Royalties paid that month, you will pay us the difference in order to meet your Minimum Royalty obligation. You will receive a grace period ("Grace Period") before you are required to begin paying Minimum Royalties. The Grace Period will be for 90 days beginning on the day you successfully complete the initial training and will expire after 90 days. If you purchase multiple franchises at the same time, you will receive an increased Grace Period for your second through fourth franchises as summarized below.
The Grace Periods are as follows:
| Franchise Number | Grace Period in Months Following Grace Period | |
|---|---|---|
| Expiration | ||
| 2 | 12 months | |
| 3 | 24 months | |
| 4 | 36 months |
The "Minimum Royalty" is as follows:
| Timeframe | Minimum Roya
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees have two options for calculating the royalty fee. The royalty fee is the greater of 8% of gross sales or a minimum royalty amount. Gross sales include revenues from all goods, services, and products sold through the Kidokinetics business, including income from cash, credit, and gift cards. Gross sales do not include sales tax, documented customer refunds, or documented employee discounts up to 3% of gross sales.
The minimum royalty amount varies based on the timeframe of operation. For the first 12 months after the grace period, the minimum royalty is $600 per month. From months 13 to 24, it increases to $800 per month, and from month 25 onwards, the minimum royalty is $1,000 per month. Franchisees are required to pay royalties weekly based on 8% of gross sales. At the end of each month, if the total weekly royalty payments are less than the minimum royalty for that month, the franchisee must pay the difference to meet the minimum royalty obligation.
Kidokinetics provides a grace period before franchisees are required to pay minimum royalties. This grace period is 90 days, starting from the completion of the initial training. If a franchisee purchases multiple franchises simultaneously, the grace period is extended for the second through fourth franchises. The franchisee must pay the greater of 8% of gross sales or the minimum royalty, ensuring Kidokinetics receives a consistent revenue stream while allowing new franchisees some time to establish their business before meeting the minimum royalty requirements.