What are the consequences of failing to meet the minimum performance schedule for Hyper Kidz businesses?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ell these development rights to another multi-unit developer or to develop the Hyper Kidz Businesses ourselves.
To maintain your rights under the Multi-Unit Development Agreement you must have open and in operation the cumulative number of Hyper Kidz Businesses stated on the minimum performance schedule by the dates agreed upon in the minimum performance schedule. Failure to do so will be grounds for either a loss of territorial exclusivity or a termination of the Multi-Unit Development Agreement.
In addition, upon the expiration of the term of the Multi-Unit Development Agreement, which is when the last Hyper Kidz Business to be developed within the Development Area opens for business, your exclusive rights under the Multi-Unit Development Agreement with respect to the Development Area will terminate and we and our affiliates will have the right to operate and to grant to others development rights and franchises to develop and operate Hyper Kidz Businesses within the Development Area. This right will be subject only to the territorial rights under the Franchise Agreements signed by you for Hyper Kidz Businesses in the Development Area and your right of first refusal to develop additional Hyper Kidz Businesses, as described above.
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, failing to meet the minimum performance schedule outlined in the Multi-Unit Development Agreement can lead to significant repercussions. The core requirement is that franchisees must have the agreed-upon cumulative number of Hyper Kidz businesses open and operating by the dates specified in the minimum performance schedule.
Failure to adhere to this schedule provides grounds for Hyper Kidz to take action. Specifically, the consequences include either the loss of territorial exclusivity or the termination of the Multi-Unit Development Agreement. This means that Hyper Kidz could reduce the franchisee's exclusive rights to develop within a defined area or completely terminate the agreement, effectively ending the franchise relationship.
After the last Hyper Kidz Business under the minimum performance schedule has opened, the Multi-Unit Development Agreement will expire. If the franchisee has complied with the terms of their Multi-Unit Development Agreement and are in compliance with their Franchise Agreements, Hyper Kidz will offer the franchisee the right to develop additional Hyper Kidz Businesses within the Development Area. The franchisee must exercise this option, in full, within 60 days after notice from Hyper Kidz. If the franchisee does not exercise or declines this right of first refusal, Hyper Kidz has the right to sell these development rights to another multi-unit developer or to develop the Hyper Kidz Businesses themselves.