Considering a Kiddie Academy Franchise? Don’t Overlook These 23 Important Franchise Fees

Updated October 2, 2019.

If you are considering a Kiddie Academy franchise, don’t get blindsided by these 23 important franchise fees (from the initial franchise fee, to the royalty fee, to 21 other fees found in Items 5 and 6 of Kiddie Academy’s 2019 FDD).

1.  Initial Fee:  $135,000

• The total Initial Fee is $135,000. The Initial Fee is payable in installments.

• The amount of $25,000 is due when you sign the Franchise Agreement.

• The amount of $50,000 is due when your site has been accepted by Kiddie Academy and you sign a lease or purchase agreement for the Franchised Business.

• The amount of $30,000 is due when the building permit or other certificate or permit authorizing construction of the Franchised Business is issued, the actual commencement of construction, or when your loan has been funded, whichever occurs first.

• The amount of $30,000 is due when your loan has been funded or when you receive your certificate of occupancy, whichever occurs first.

• Kiddie Academy permits existing, qualified, and approved franchisees who are in good standing with Kiddie Academy to acquire an additional franchise at a reduced Initial Fee (the “Reduced Initial Fee”).

• To qualify for any of the Reduced Initial Fee programs described below, franchisees must meet every requirement applicable to other new franchisees, and all of Kiddie Academy’s other criteria apply, including its discretion in accepting proposed sites.

• If a franchise purchase qualifies for more than one of Kiddie Academy’s Reduced Initial Fee programs, application of more than one program to a single transaction shall be at Kiddie Academy’s sole discretion.

• The table below describes the Reduced Initial Fee available under each Reduced Initial Fee program:

• Total Initial Fee for Existing Franchisee Purchasing Second Franchise:  $75,000
• Total Initial Fee for Existing Franchisee Purchasing Third and Subsequent Franchise:  $60,000
• Total Initial Fee for New Franchisee Purchasing Multiple Franchises:  $60,000
• Total Initial Fee for New Franchisee Purchasing Under VetFran Program:  $110,000

2.  Royalties:  7% of Gross Revenues

• Due Date:  On Monday each week, on revenues generated during the week that ended nine days earlier.

• “Gross Revenues” include all revenues generated from the provision of any and all services and/or the sale of any and all products and, whether by the franchisee or a third-party provider, that relate to or arise from the Franchised Business. It does not include taxes collected from customers.

• Royalty payments are sent by automatic electronic bank transfer from your bank to Kiddie Academy’s account at the bank Kiddie Academy designates.

• Royalty Reductions: Kiddie Academy offers to each new, qualified franchisee who signs a Franchise Agreement during the scheduled orientation meeting at Kiddie Academy’s headquarters (the “Orientation Day”) a 50% reduction in the Royalty rate (3.5% of Gross Revenues instead of 7.0% of Gross Revenues) for the first six months after the Franchised Business opens. A franchisee is only eligible for this Royalty Reduction for the first Franchised Business the franchisee opens.

3.  Brand Building Fund:  2% of Gross Revenues

• Due Date:  On Monday each week, on revenues generated during the week that ended nine days earlier.

• Brand Building Fees are sent by automatic electronic bank transfer from your bank to an account at the bank Kiddie Academy designates, on a weekly basis, in the same manner as your Royalties.

4.  Right to Audit for Revenue Compliance:  if an audit reveals underpayments, you pay the amount of underpayments, plus interest on amounts owed to Kiddie Academy at 2% above the prime rate, or the maximum rate permitted by law, whichever is less. If underpayments of more than 3% are discovered, in addition to the amounts stated above, you pay the cost of the audit or $10,000, whichever is greater, plus an amount that is equal to 10% of the amount owed. If an audit is conducted as a result of franchisee’s failure to supply required records, after default, you pay the cost of the audit in addition to any amounts owed.

• Due Date:  Immediately upon receipt of audit report.

• All amounts are payable by you to Kiddie Academy via electronic bank transfer.

• Interest begins from date of the underpayment.

5.  Failure to Comply with Reporting and Records Requirements:  $500 for each failure to comply

• Due Date:  Payable immediately.

• All amounts are payable by you to Kiddie Academy via electronic bank transfer.

6.  Relocation of Kiddie Academy Franchise:  $30,000

• Due Date:  Payable on the date your Franchised Business opens at its new location.

• Payable to Kiddie Academy when you relocate your Franchised Business to another site.

7.  Transfer (sale of your assets or the Franchised Business):  no fee

• Due Date:  Included.

8.  Administrative Fee from Transferee (sale of business):  $25,000 to $50,000

• Due Date:  Payable by the acquirer on the date of transfer.

• $50,000 payable to Kiddie Academy by the new franchisee/acquirer when you transfer your Franchised Business to a new Kiddie Academy franchisee. The Administrative Fee is reduced to $25,000 if the new franchisee/acquirer is a party to one or more Franchise Agreements with Kiddie Academy on the date of the transfer.

9.  Referral Fee (sale of business):  no fee

• Due Date:  Included.

10.  Interest on Late Payments:  maximum rate allowed by law (or, in the absence of such a rate, 1.5% per month)

• Due Date:  Payable simultaneously with all amounts that are late.

• Interest on late payments for all amounts due, until the obligation is paid in full.

11.  Franchisee Training (at Kiddie Academy’s corporate office):  one training for all franchisees is included

• Due Date:  Included.

• You will be responsible for all travel and living expenses you incur while attending Kiddie Academy’s training course.

12.  Director Training (at Kiddie Academy’s corporate office):  one training per year is included

• Due Date:  Included.

• You will be responsible for all travel and living expenses incurred by your Academy’s Director to attend the training course.

• Kiddie Academy reserves the right to charge a fee, currently $2,500, for each additional Director attending the training program (in a given year) provided at Kiddie Academy’s corporate office.

13.  Background Check Fee:  no fee

• Due Date:  Included.

• You must authorize Kiddie Academy to conduct the criminal background and credit checks, but no additional fee is charged to you for these checks.

14.  Site Selection:  no fee

• Due Date:  Included.

• You are responsible for any costs you incur related to site selection.

15.  Franchise Renewal:  no fee

• You must sign Kiddie Academy’s then-current Franchise Agreement at the time of your renewal.

16.  Temporary Service Fee:  $1,000 per day plus Kiddie Academy’s travel expenses, lodging, and other reasonable expenses, until default is cured and you are able to manage your Academy based upon Kiddie Academy’s requirements

• Due Date:  Within seven days of Kiddie Academy’s invoice.

• If you refuse or are unable to cure a default under your Franchise Agreement, Kiddie Academy may determine not to immediately terminate your Franchise Agreement, and temporarily take over the management of your Academy.

17.  Fees/Interest for Failure to Repair Academy:  15% of Kiddie Academy’s total aggregate expenses, if it incurs an administrative fee

• Due Date:  Within seven days of Kiddie Academy’s invoice.

• Payable if Kiddie Academy performs repair or refurbishment of your Franchised Business. All amounts are payable by you to Kiddie Academy via electronic bank transfer.

18.  Late Charge on Late Payments:  10% of amount of each late payment, plus interest at the legal rate

• Due Date:  Payable simultaneously with late payment.

• A late charge will be applied to all sums that are not paid in full when due. Interest begins from the date of the payment is due.

19.  Annual Franchisee Conference (every other year):  $1,500 fee if you do not attend at least once every other year

• Due Date:  Payable before conference.

• You must also pay all travel-related expenses, including food, lodging, payroll, and transportation.

20.  Replacement of Manuals:  $500 per volume replaced if replaced in hard copy by Kiddie Academy. No charge by Kiddie Academy if replaced by franchisee utilizing online access to Manuals.

• Due Date:  Payable upon replacement.

• All amounts are payable by you to Kiddie Academy via electronic bank transfer.

21.  Liquidated Damages:  156 weeks of royalty fees and Brand Building Fund fees

• Due Date:  Payable upon termination.

• If the Franchise Agreement is terminated before the end of its term, you must pay Kiddie Academy liquidated damages for its lost future royalty fees and Brand Building Fees, calculated as the average weekly amount of those fees multiplied by 156 weeks (or the number of weeks remaining in the term of your Franchise Agreement, if shorter).

22.  Enforcement Costs:  reasonable costs incurred by Kiddie Academy in enforcing your agreements

• Due Date:  As incurred.

• Payable if you violate a term or condition in your Franchise Agreement, and Kiddie Academy incurs costs to enforce it.

23.  Network Equipment:  Kiddie Academy’s cost to purchase and install the required Network Equipment, plus a 25% administrative fee paid to Kiddie Academy

• Due Date:  As billed.

• If you do not purchase or install the required Network Equipment, Kiddie Academy may purchase and install it and charge you for the cost plus a 25% administrative fee paid to Kiddie Academy.