Who are considered 'Principals' in relation to a Hyper Kidz franchise agreement?

According to the 2024 Hyper Kidz Franchise Disclosure Document, a 'Principal' refers to individuals or entities with direct or indirect legal or beneficial ownership interests in the franchisee, the franchise agreement, the Hyper Kidz Business, or any other direct or indirect property rights in these aspects. Furthermore, each Principal having an equity ownership interest is designated as an Owner on Attachment 7 of the Franchise Agreement.

This definition is important because the actions and compliance of these Principals can significantly impact the franchisee's standing with Hyper Kidz. For instance, if a franchisee seeks to transfer their interest in the franchise, the agreement stipulates that both the franchisee and its Principals must be in full compliance with the existing agreement. Additionally, the proposed transferee and their Principals must meet Hyper Kidz's standards for franchisees and be of good moral character.

Moreover, Principals may be required to execute non-competition agreements in favor of Hyper Kidz and any transferee if they are transferring their interest. This prevents them from engaging in any competitive business within a 15-mile radius of any Hyper Kidz location for a period of two years following the transfer. Hyper Kidz also recommends, but does not require, that one of the Principals actively participate in the operation of the Hyper Kidz Business.