Does the Hyper Kidz agreement require approval for transfers resulting from divorce or insolvency?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.2.3 As used above, an assignment, sale or other transfer shall include the following events:
- (d) transfer in a divorce, insolvency, corporate or partnership dissolution proceeding, or in the event of the death of you or one of your Principals, by will, declaration of or transfer in trust, or under the laws of intestate succession or otherwise by operation of law.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, any transfer of ownership resulting from divorce or insolvency requires the franchisor's prior written approval. Specifically, the term "transfer" includes transfers in a divorce, insolvency, corporate, or partnership dissolution proceeding. This requirement is in place because Hyper Kidz relies on the skills, character, and financial capacity of its franchisees and principals.
This means that if a Hyper Kidz franchisee goes through a divorce or becomes insolvent, they cannot simply transfer their franchise to another party without Hyper Kidz's consent. Hyper Kidz has the right to assess the proposed transferee to ensure they meet the brand's standards. This protects the integrity of the Hyper Kidz brand and the interests of other franchisees in the system.
Without approval, any such transfer constitutes a breach of the franchise agreement and conveys no rights to the franchise or its assets. The prospective franchisee should be aware that Hyper Kidz maintains control over who can operate a franchise, even in situations like divorce or insolvency, to uphold its brand standards and protect the franchise system.