What is the consequence of assigning the Hyper Kidz agreement without consent?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
11.1 This Agreement is personal to you and you shall neither sell, assign, transfer nor encumber this Agreement, the Development Rights, or any other interest hereunder, nor suffer or permit any such assignment, transfer or encumbrance to occur directly, indirectly or contingently by agreement or by operation of law without our prior written consent. You understand that this Agreement may not be
pledged, mortgaged, hypothecated, given as security for an obligation or in any manner encumbered. The assignment or transfer of any interest, except in accordance with this Section shall constitute a material breach of this Agreement.
- 11.2 You have represented to us that you are entering into this Agreement with the intention of complying with its terms and conditions and not for the purpose of resale of the Development Rights hereunder.
Therefore, you agree that any attempt to assign this Agreement prior to the time that at least twenty-five percent (25%) of the Hyper Kidz Businesses to be constructed hereunder are opened or under construction shall be deemed to be an event of default.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, the agreement is personal to the franchisee, and assigning or transferring it without prior written consent from Hyper Kidz constitutes a material breach of the agreement. This restriction extends to selling, assigning, transferring, or encumbering the agreement, development rights, or any other interest, whether directly, indirectly, or contingently, through agreement or by operation of law.
For a Hyper Kidz franchisee, this means that they cannot simply sell or transfer their franchise to someone else without first getting approval from Hyper Kidz. Attempting to do so would be a violation of the agreement.
Furthermore, the FDD states that any attempt to assign the agreement before at least 25% of the Hyper Kidz businesses to be constructed under the agreement are opened or under construction is considered an event of default. This provision underscores Hyper Kidz's interest in ensuring that franchisees are committed to developing the business before considering a transfer.