Can Kidokinetics use the Brand Development Fund to cover its own expenses related to administering the fund?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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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.
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 over how the Brand Development Fund is utilized. Kidokinetics may use the fund for local, regional, or national marketing, or any expenditure that it deems necessary to promote or improve the Kidokinetics system or brand. This includes expenses related to administering the fund.
Specifically, Kidokinetics may use the Brand Development Fund for activities such as developing and administering advertising and marketing materials, managing social media, conducting market research, and implementing quality control programs. The fund can also cover the fees and expenses of any advertising agency Kidokinetics engages. Importantly, the fund can be used for Kidokinetics's own expenses, including labor, administrative, and overhead costs, associated with these activities.
For a prospective franchisee, this means that a portion of the 2% of gross sales contributed to the Brand Development Fund could be used to cover Kidokinetics's administrative and operational expenses related to managing the fund. While this is a common practice in franchising, it's important for franchisees to understand how their contributions are being used. Kidokinetics will provide an annual accounting of the Brand Development Fund upon written request. During the fiscal year ended December 31, 2023, Kidokinetics spent 100% of the Brand Development Fund Contributions on administration.