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Kiddie Academy Franchise Cost & Fees

Date of Incorporation: 1981
Franchising Since: 1992
Headquarters: Abingdon, Maryland

Business Description: Kiddie Academy Domestic Franchising, LLC is the franchisor. The Kiddie Academy system is a specialized system for the development and operation of year-round child care centers that offer academic and social enrichment, as well as education based child care services for children.

Franchise Offer: The franchisee will operate a specially designed educational child care facility offering programs for children between six weeks and twelve years of age under the name Kiddie Academy using the Kiddie Academy System and Marks.

Financial Assistance: Franchisees are responsible to make their own financing arrangements and we do not offer direct or indirect financing. However, the franchisor will assist franchisees in contacting lending institutions, provide consultation on obtaining third party financing, and assist them in the preparation of applications to lending institutions at no additional cost. The franchisor will not derive any revenue of any kind for this assistance. Kiddie Academy franchisees are eligible for expedited and streamlined Small Business Administration (SBA) loan processing through the SBA's Franchise Registry Program.

Training and Assistance: The Franchisee Training Program will consist of approximately 80 hours of training in Kiddie Academy's methods, techniques and curriculum applications. Some portions of the Franchisee Training Program are currently provided through conference calls and some portions are currently conducted “on-site” at the corporate headquarters located in Abingdon, Maryland, which is offered six times per year, and some portions will be conducted at the franchisee’s Academy. Some of this training, including the on-site portion, will be conducted while the franchisee’s Academy is being constructed and before it is open and operational. Some of this training will be scheduled after the Franchised Business is open and operational. Other portions of the initial and ongoing training will be provided through Kiddie Academy University, an online portal hosting comprehensive training materials. The franchisor will provide the Academy’s initial Director with approximately five days of instruction in the day-to-day management and operation of a Kiddie Academy Franchise. Franchisees and/or their Academy's Director also are obligated to attend, at the franchisor’s request, refresher training programs, courses, seminars, and other training programs which it may require during the term of the franchise.

Territory: Franchisees will receive an exclusive territory. The protected territory will consist of an area that equals a circle that is three miles in diameter, with the Kiddie Academy Franchise located at the circle's center. However, if the population in a two-mile diameter circle (a radius of one mile) around the Academy exceeds 50,000 people but not more than 125,000 people, the franchisee will receive a protected territory consisting of a one-mile diameter circle (a radius of one-half mile) with the Kiddie Academy Franchise located at the circle’s center. If the population in a two-mile diameter circle (a radius of one mile) around the Academy exceeds 125,000 people, the franchisee will receive no protected territory. Franchisees are not restricted as to the market or territory from which they may solicit business or the customers from whom they may solicit business, but the franchisor does not grant the exclusive right to use other channels of distribution, such as the Internet, catalog sales, telemarketing, direct marketing, to make sales outside of the protected territory.

Term of Agreement and Renewal: The length of the initial franchise term is 1 year from the date of entry into the Preliminary Agreement. Franchisees may extend the term of the Preliminary Agreement for a first extension period of 6 months. Additional extensions may be permitted by the franchisor at its sole discretion.

Obligations and Restrictions: The Franchise Agreement provides that the Academy must at all times be under the direct, on-premises supervision of a trained and certified full-time Director who is qualified to act as a Director in the franchisee’s State. The franchisor requires franchisees to offer and sell only those services that it has approved. Further, franchisees must offer all services that the franchisor designates as required for all franchisees.

Estimated Number of Units: 130

Investment Tables:
Initial Investment for a Leased Facility
Name of Fee Low High
Initial Franchise Fee $120,000 $120,000
Lease Deposit $16,000 $100,000
Tenant Contributions for Improvements Varies
Professional Fees and Loan Fees $22,000 $50,000
Kitchen Equipment and Supplies $18,000 $26,000
Supplies/Equipment for Inside of Academy, Playground and Online Training Component $90,000 $125,000
Outdoor Fixed Playground Equipment $46,000 $85,000
Computer Hardware and Software and Classroom Technology $20,000 $35,000
Office and Lobby Furniture, Office Equipment and Supplies, and Telephone System $10,000 $25,000
Indoor and Outdoor Signage $15,000 $20,000
Travel and Living Expenses While Training $1,000 $3,000
Transportation Vehicles and Equipment $0 $5,000
Insurance and Utility Deposits $3,500 $7,000
Business Licenses $500 $1,500
Start-Up Marketing and Advertising Expenses $35,000 $35,000
Additional Funds/Working Capital – 3 months after opening $25,000 $100,000
ESTIMATED TOTAL $422,000 $737,500
Initial Investment for a Purchased Facility
Name of Fee Low High
Initial Franchise Fee $120,000 $120,000
Real Estate Acquisition and Construction Costs $1,990,000 $2,7000,000
Professional Fees and Loan Fees $117,000 $400,000
Kitchen Equipment and Supplies $18,000 $26,000
Supplies/Equipment for Inside of Academy, Playground and Online Training Component $90,000 $125,000
Outdoor Fixed Playground Equipment $46,000 $85,000
Computer Hardware and Software and Classroom Technology $20,000 $35,000
Office and Lobby Furniture, Office Equipment and Supplies, and Telephone System $10,000 $25,000
Indoor and Outdoor Signage $15,000 $20,000
Travel and Living Expenses While Training $1,000 $3,000
Transportation Vehicles and Equipment $0 $5,000
Insurance and Utility Deposits $3,500 $7,000
Business Licenses $500 $1,500
Start-Up Marketing and Advertising Expenses $35,000 $35,000
Additional Funds/Working Capital – 3 months after opening $50,000 $150,000
ESTIMATED TOTAL $2,516,000 $3,737,500
Other Fees
Type of Fee Amount
Royalties 7% of gross revenues.
Brand Building Fund 2% of gross revenues.
Right to Audit for Revenue Compliance If underpayments are discovered via an audit, the franchisee pays the amount of underpayments, plus interest on amounts owed to the franchisor 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, the franchisee pays the cost of the audit or $10,000, whichever is greater, plus an amount that is equal to ten percent of the amount owed. If an audit is conduced as a result of Franchisee’s failure to supply required records, after default, the franchisee pays the cost of the audit.
Telephone Fee $45 per month per line.
Initial Training First 2 attendees are free. Each additional attendee pays $100 per day.
Additional Territory Fee $50,000 if the franchisee simultaneously buys two Territories when he/she signs the first franchise agreement.
An amount equal to the then-current initial Territory fee if the franchisee buys an Additional Territory at a later time.
Failure to Comply with Reporting and Records Requirements $500 for each failure to comply.
Relocation of Kiddie Academy Franchise $30,000
Transfer (sale of assets of the franchised business) $25,000
Administrative Fee from Transferee (sale of business) 10% of gross sales price of Franchised Business or $35,000, whichever is less.
Referral Fee (sale of business) 6% of gross selling price of business or $10,000, whichever is greater.
Interest on Late Payments Maximum rate allowed by law (or in the absence of such a rate, 1.5% per month).
Franchisee Training (at Franchisor’s corporate office) One training for all franchisees is included.
Director Training (at Franchisor’s corporate office) One training per year is included.
Background Check Fee Criminal background and credit check are included.
Franchise Renewal Fee 10% of the then current Initial Franchise Fee for the renewal term.
Site Selection Fee The franchisor’s costs of calls, travel, meetings, and research are included in the other fees.
Temporary Service Fee $1,000 per day plus the franchisor’s travel expenses, lodging, and other reasonable expenses, until default is cured and the franchisee is able to manage Academy based upon the franchisor’s requirements.
Fees/Interest for Failure to Repair Academy 15% the franchisor’s total aggregate expenses if it incurs an administrative fee.
Late Charge on Late Payments 10% of amount of each late payment, plus interest at the legal rate.
Annual Franchisee Conference – every other year Reasonable registration/attendance fee.
Replacement of Manuals $500 per volume replaced if replaced in hard copy by Franchisor. No charge by franchisor if replaced by Franchisee utilizing online access to manuals.
Liquidated Damages 156 weeks of royalty fees and Brand Building Fund fees.

The above information has been taken from the FDD of Kiddie Academy. Year of FDD: 2016

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