What is considered a 'Competitive Business' to a Hyper Kidz franchise?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
If a Principal is transferring his/her interest, such Principal must execute a non-competition agreement in favor of us and the transferee.
In either case, the non-competition agreement shall provide that neither you, your Principal(s) nor your transferring Principal(s) (whichever is applicable) nor any member of their immediate families shall directly or indirectly for a period of two (2) years commencing on the effective date of such transfer:
(1) have any interest as a disclosed or beneficial owner in any Competitive Business located or operating within fifteen (15) miles of your Hyper Kidz Business or any other Hyper Kidz Business in the System; or
(2) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for any Competitive Business located or operating within fifteen (15) miles of your Hyper Kidz Business or any other Hyper Kidz Business in the System.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, a 'Competitive Business' is defined within the context of non-competition agreements that franchisees and their principals must adhere to, particularly when transferring ownership. These agreements prevent franchisees, their principals, and their immediate families from engaging in activities that could directly compete with Hyper Kidz.
Specifically, for a period of two years following the transfer of a Hyper Kidz franchise, the non-competition agreement prohibits involvement in any business that is considered a 'Competitive Business' within a 15-mile radius of the franchisee's Hyper Kidz location or any other Hyper Kidz Business in the System. This restriction includes both owning an interest in such a business and performing services for it in any capacity, such as a director, officer, manager, employee, consultant, representative, or agent.
This non-compete clause ensures that former franchisees and their principals do not leverage their knowledge and experience gained from operating a Hyper Kidz Business to directly compete with the brand. This protects the Hyper Kidz system and the interests of other franchisees by preventing the establishment of competing businesses that could draw customers away from existing Hyper Kidz locations. The restrictions do not apply to ownership of less than 5% of shares in a publicly owned company.