factual

Does an Extreme Art Studio franchisee receive any territorial rights in connection with the Modules?

Extreme_Art_Studio Franchise · 2024 FDD

Answer from 2024 FDD Document

hisee will maintain detailed records of all cost information, sales information, and other sales data associated with the Module(s) that it operates ("Module Data").

Franchisee agrees to provide the Module Data to Franchisor at Franchisor's request and in accordance with the recordkeeping and reporting requirements of the Franchise Agreement and the Franchise Agreement is hereby amended accordingly. Franchisee further agrees that the Module Data is owned by Franchisor and that Franchisor may use the Module Data in any way it chooses.

    1. NO TERRITORIAL RIGHTS FOR MODULES. Franchisee agrees and acknowledges that it will not receive any territorial rights whatsoever in connection with the Module(s). Franchisor's affiliate, Kidcreate Studio Franchising, LLC offers each of its franchisees identical rights to each of the Modules and the same curriculum. Accordingly, none of the territorial rights granted to Franchisee under the Franchise Agreement shall apply to the Module(s) selected. Further, Franchisee understands and agrees that other brands that Franchisor and its affiliates license, franchise and operate, including Kidcreate franchisees, may offer identical curriculum using the same names as the Module(s) that Franchisee offers and that Franchisee may face competition from such parties. Franchisee agrees that the presence of Kidcreate franchisees and other parties operating under brands other than Extreme Art are free to offer the Module(s) in Franchisee's Territory and that doing so shall not be considered a violation of the Franchise Agreement. Franchisee agrees that it will not raise any claim

Source: Item 22 — CONTRACTS (FDD page 49)

What This Means (2024 FDD)

According to the 2024 Extreme Art Studio Franchise Disclosure Document, franchisees do not receive any territorial rights in connection with the Modules. The FDD explicitly states that franchisees acknowledge and agree they will not receive any territorial rights for the Modules. This means that Extreme Art Studio can license or franchise others, including its affiliates like Kidcreate Studio Franchising, LLC, to offer identical curriculum using the same names as the Modules, even within the franchisee's territory.

Extreme Art Studio franchisees may face competition from other brands licensed or operated by the franchisor and its affiliates, such as Kidcreate franchisees, who are free to offer the Modules within the franchisee's territory. The franchisee agrees that the presence of these other brands offering the Modules will not be considered a violation of the Franchise Agreement.

Furthermore, the franchisee agrees not to raise any claims against Extreme Art Studio regarding competition or territorial encroachment related to the Modules. This lack of territorial protection for Modules is a significant consideration for prospective franchisees, as it could impact their revenue potential due to increased competition within their designated territory. In addition to other fees, the franchisee shall pay Extreme Art Studio an additional monthly "Module Technology Fee" of $250.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.