After the Hyper Kidz agreement expires, for how long is the franchisee restricted from engaging in a Competitive Business?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ou shall not:
- 12.1.1 Divert or attempt to divert any business or client of the business to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System.
- 12.1.2 Own, maintain, advise, help, invest in, make loans to, be employed by, engage in or have any interest in any business other than the Hyper Kidz Businesses (including any business operated by you prior to entry into this Agreement), which business is of a character and concept similar to a Hyper Kidz Business, including a business which offers the same or substantially similar products and services (a "Competitive Business").
- 12.2 You covenant that, except as otherwise approved in writing by us, you shall not, for a continuous and uninterrupted period commencing upon the expiration or termination of this Agreement, and continuing for two (2) years thereafter (and, in case of any violation of this covenant, for two (2) years after the violation ceases), either directly or indirectly, for yourself, or through, on behalf of or in conjunction with any person, persons, partnership or corporation, own, maintain, advise, help, invest i
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, franchisees are subject to a covenant restricting them from engaging in a Competitive Business for a specified period after the agreement expires or terminates. Specifically, this restriction lasts for two years. This means that for two years following the end of the franchise agreement, the franchisee cannot own, maintain, advise, help, invest in, make loans to, be employed by, engage in, or have any interest in a business similar to Hyper Kidz.
The restriction applies within a 15-mile radius of any Hyper Kidz Business in the System. This geographic limitation is designed to protect Hyper Kidz's market presence and prevent former franchisees from directly competing using the knowledge and experience gained during their time with the franchise. The agreement specifies that this restriction applies continuously and uninterruptedly, starting from the expiration or termination date of the agreement and continuing for the full two-year period, even if a violation occurs, the restriction extends for two years after the violation ceases.
Hyper Kidz also retains the right to modify the scope of this covenant. The franchisor can reduce the scope of the non-compete agreement at their discretion by providing written notice to the franchisee. This modification becomes effective immediately upon the franchisee receiving the notice. This clause gives Hyper Kidz flexibility in enforcing the non-compete agreement and allows them to adjust the restrictions based on specific circumstances or changes in the market.
These non-compete terms are typical in franchising to protect the brand and prevent franchisees from using proprietary information to compete against the franchise system after their agreement ends. Prospective Hyper Kidz franchisees should carefully consider these restrictions and how they might impact their future business opportunities before entering into the franchise agreement.