What actions by a Hyper Kidz multi-unit developer constitute non-curable defaults that could lead to termination?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| (c) Requirements for multi- | None | Not applicable | |
| unit developer to renew | |||
| or extend | |||
| (d) Termination by multi- | None | You may seek to terminate on any grounds | |
| unit developer | available to you at law | ||
| (e) Termination by | None | Not applicable | |
| franchisor without | |||
| cause | |||
| (f) Termination by | Section 9 | We can terminate if you commit any one of | |
| franchisor with cause | 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; if a Franchise Agreement with us is terminated according to its terms (this is a cross-default provision) | |
| (i) Multi-unit developer’s obligations on termination/non- renewal | Section 10 | You must stop selecting sites for Hyper Kidz Businesses, and you may not open any more Hyper Kidz Businesses |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 41–49)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, there are specific actions that a multi-unit developer can take that constitute non-curable defaults, which could lead to termination of the Multi-Unit Development Agreement. These actions are outlined in Section 9 of the agreement.
These non-curable defaults include failing to meet the minimum performance schedule agreed upon, failing to comply with applicable laws, or if all of the Hyper Kidz businesses cease operations. Additional non-curable defaults include unauthorized transfer of the agreement, making a material misrepresentation to Hyper Kidz, or a conviction by the developer or their principals of an indictable offense. Furthermore, bankruptcy or insolvency, or the termination of a Franchise Agreement according to its terms, also constitute non-curable defaults.
These stipulations are important for a prospective multi-unit developer to consider, as these defaults cannot be remedied and will result in the termination of the agreement. This means the developer would lose the rights to develop further Hyper Kidz locations and could face additional penalties as outlined in Section 10 of the Multi-Unit Development Agreement, such as ceasing site selection and the opening of any more Hyper Kidz businesses.