What actions by the Hyper Kidz multi-unit developer constitute 'cause' for termination of the Multi-Unit Development Agreement, where the defaults are curable?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| (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 |
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, there are specific actions that can lead to the termination of the Multi-Unit Development Agreement if the multi-unit developer fails to correct them after receiving notice. These curable defaults, as detailed in Section 9 of the agreement, include using Hyper Kidz's trademarks or operational systems without the franchisor's explicit consent.
Another curable default involves engaging in a business that directly competes with Hyper Kidz. Additionally, failing to make timely payments to Hyper Kidz as required under the agreement is considered a curable default. Starting the development of a Hyper Kidz location before fulfilling all pre-development obligations also falls under this category.
Furthermore, a multi-unit developer's failure to obtain Hyper Kidz's consent when it is required, or opening a Hyper Kidz business before a Franchise Agreement has been formally signed for that specific location, are also considered curable defaults that could lead to termination if not rectified.