What actions constitute a non-curable default that could lead to termination of the Hyper Kidz Multi-Unit Development Agreement, according to Section 9?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Multi Unit Development Agreement | Summary | |
|---|---|---|---|
| (c) | Requirements for multi unit developer to renew or extend | None | Not applicable |
| (d) | Termination by multi unit developer | None | You may seek to terminate on any grounds available to you at law |
| (e) | Termination by franchisor without cause | None | Not applicable |
| (f) | Termination by franchisor with cause | Section 9 | We can terminate if you commit any one of several listed violations |
| (g) | "Cause" defined – curable defaults | Section 9 | If you use the Marks or System without our consent; participating in a Competitive Business; failure to pay money to us when due; you begin developing a Hyper Kidz Business before all of your pre-development obligations are met; failure to obtain our consent when required; you open any Hyper Kidz Business before a Franchise Agreement for that Hyper Kidz Business has been signed |
| (h) | "Cause" defined – non curable defaults | Section 9 | Failure to meet your minimum performance schedule; failure to comply with applicable laws; if all of your Hyper Kidz Businesses stop operating; unauthorized transfer; you make a material misrepresentation to us; conviction by you or your Principals of an indictable offense; bankruptcy or insolvency; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 41–49)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Section 9 of the Multi-Unit Development Agreement outlines specific non-curable defaults that could lead to termination. These include failing to meet the minimum performance schedule outlined in the agreement, failing to comply with applicable laws, or ceasing operations at all Hyper Kidz businesses developed under the agreement.
Additionally, Hyper Kidz can terminate the agreement if there is an unauthorized transfer of the agreement, a material misrepresentation made to Hyper Kidz, or a conviction of an indictable offense by the developer or its principals. Bankruptcy or insolvency of the multi-unit developer also constitutes a non-curable default.
Finally, a cross-default provision states that if a Franchise Agreement with Hyper Kidz is terminated according to its terms, this will also trigger a non-curable default under the Multi-Unit Development Agreement, leading to its potential termination. Prospective franchisees should carefully review Section 9 of the Multi-Unit Development Agreement to fully understand these termination conditions and their implications.