How will Hyper Kidz advise a developer of the terms and conditions for acquiring development rights for additional Hyper Kidz businesses?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.2 Upon completion of the Minimum Performance Schedule, which is when the final Hyper Kidz Business to be developed hereunder has opened for business, if we determine that it is desirable to operate one or more additional Hyper Kidz Businesses in the Development Area, and provided you have timely complied with the Minimum Performance Schedule and are then in compliance with all terms and conditions of all Franchise Agreements, you shall have a right of first refusal to obtain the Development Rights to such additional Hyper Kidz Businesses upon such reasonable terms and conditions as are then determined by us including, but not limited to, the imposition of a new Development Fee and the payment of the then-current initial franchise fee upon execution of the then-current Franchise Agreement. In such case, we shall advise you in writing of the terms and conditions for the acquisition of the Development Rights for such additional Hyper Kidz Businesses. You must notify us in writing within sixty (60) days of the receipt of such notice whether you wish to acquire the Development Rights to all of such additional Hyper Kidz Businesses. If you do not exercise this right of first refusal, in whole, we may, following the expiration of the sixty (60) day period, grant the Development Rights to such additional Hyper Kidz Businesses to any other person or persons on the same terms and conditions or we may elect to develop and construct any of such additional Hyper Kidz Businesses.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, a multi-unit developer who has met their initial development schedule and is in compliance with all franchise agreements has a right of first refusal for additional Hyper Kidz businesses in their development area. Hyper Kidz will provide written notice to the developer that includes the terms and conditions for acquiring these additional development rights. These terms can include a new development fee and the then-current initial franchise fee upon execution of the current Franchise Agreement.
The developer then has 60 days from the receipt of the notice to inform Hyper Kidz in writing whether they wish to acquire the development rights for all of the additional Hyper Kidz businesses. If the developer declines or does not respond within the 60-day period, Hyper Kidz has the right to offer the development rights to other parties on the same terms or may choose to develop and construct the additional Hyper Kidz businesses themselves.
This right of first refusal provides an opportunity for existing developers to expand their presence within their designated area, but it is contingent on their past performance and compliance with existing agreements. The specific terms for new development rights are determined by Hyper Kidz at the time of the offer, giving them flexibility to adjust fees and conditions based on market conditions and the developer's track record. A prospective franchisee should inquire about the typical range of terms and conditions offered for additional development rights to better understand the potential costs and obligations involved in expanding their territory.