Can Hyper Kidz apply payments to indebtedness to their Affiliates?

According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz has the sole discretion to apply any payments received from a franchisee to any past due indebtedness the franchisee owes to Hyper Kidz or its affiliates. This includes debts for Royalty Fees, Brand Development Fees, Technology Fees, purchases from Hyper Kidz or its affiliates, interest, or any other indebtedness.

This means that Hyper Kidz is not obligated to apply payments in the way the franchisee might prefer or designate. Hyper Kidz can choose to allocate payments to whichever outstanding debts it deems appropriate. This could include prioritizing payments to affiliates over payments directly to Hyper Kidz, or vice versa.

For a prospective franchisee, this clause highlights the importance of maintaining good financial standing with Hyper Kidz and its affiliates. Failure to do so could result in Hyper Kidz strategically applying payments to the franchisee's disadvantage. Franchisees should ensure timely payments to avoid giving Hyper Kidz this discretionary power over their finances.