Can Kidokinetics use the Brand Development Fund for changes and improvements to the System?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
We have complete discretion on how the Brand Development Fund will be utilized. We may use the Brand Development Fund for local, regional, or national marketing, or any expenditure that we, in our sole discretion, deem necessary or appropriate to promote or improve the System or the Kidokinetics brand. For example, we may use the Brand Development Fund for: (i) developing, maintaining, administering, directing, preparing or reviewing advertising and marketing materials, promotions and programs, including social media management; (ii) public awareness of any of the Marks; (iii) public and consumer relations and publicity; (iv) brand development; (v) research and development of technology, products and services; (vi) website development (including social media) and search engine optimization; (vii) development and implementation of quality control programs; (viii) conducting market research; (ix) changes and improvements to the System; (x) the fees and expenses of any advertising agency we engage to assist in producing or conducting advertising or marketing efforts; (xi) collecting and accounting for Brand Development Fund Contributions; (xii) preparing and distributing financial accountings of the Brand Development Fund; (xiii) conducting quality assurance programs and other reputation management functions; and (xiv) our and our affiliates' expenses associated with direct or indirect labor, administrative, overhead, or other expenses incurred in relation to any of these activities. We may use national and/or regional advertising agencies as the source for our advertising materials, or we may prepare them in-house.
We are not obligated to spend any amount on advertising in the geographical area where you are or will be located. We do not guarantee that advertising expenditures from the Brand Development Fund will benefit you or any other franchisee directly, on a pro rata basis, or at all. We are not obligated to spend any amount on advertising in the geographical area where you are or will be located. We will not use the Brand Development Fund Contributions for advertising that is principally a solicitation for the sale of Franchises, but we reserve the right to include a notation in any advertisement or website indicating "Franchises Available" or similar phrasing.
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 has complete discretion regarding how the Brand Development Fund is used. The Brand Development Fund can be used for any expenditure that Kidokinetics, in its sole discretion, deems necessary or appropriate to promote or improve the Kidokinetics system or brand.
Specifically, the FDD states that the Brand Development Fund may be used for changes and improvements to the Kidokinetics system. This means that franchisee contributions to the Brand Development Fund could be used to update operational methods, introduce new programs, or otherwise modify the way Kidokinetics businesses are run.
This wide latitude in the use of the Brand Development Fund gives Kidokinetics significant control over how franchisee contributions are spent, but it also means that funds can be directed to areas that Kidokinetics believes will most benefit the entire system. However, Kidokinetics is not obligated to spend any amount on advertising in the geographical area where a franchisee is or will be located, and Kidokinetics does not guarantee that advertising expenditures from the Brand Development Fund will benefit any franchisee directly, on a pro rata basis, or at all.
It is important to note that the Brand Development Fund is not audited, although Kidokinetics will make available an annual accounting that shows how the Brand Development Fund proceeds have been spent for the previous year upon a franchisee's written request. During the fiscal year ended December 31, 2023, Kidokinetics spent 100% of the Brand Development Fund Contributions on administration.