What constitutes a 'Competitive Business' in the context of the Hyper Kidz franchise agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section or Article in Franchise Agreement | Summary |
|---|---|---|
| (q) Non-competition covenants during the term of the franchise | Article 9 and Section 11.7.3 | No involvement by you and members of your immediate families in a Competitive Business anywhere. If you are a corporate entity, you may not engage in any business other than the development and operation of Hyper Kidz Businesses. A Competitive Business is a business that offers the same or substantially similar products and services as those offered by a Hyper Kidz Business |
| (r) Non-competition covenants after the franchise is terminated or expires | Article 9 and Section 19.4 | No involvement by you or members of your immediate families in a Competitive Business for two years within 15 miles of the Franchised Business or any other Hyper Kidz Business in the System |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 41–49)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, a 'Competitive Business' is defined in relation to non-competition covenants both during and after the franchise term. During the term of the franchise agreement, franchisees and their immediate family members are prohibited from any involvement in a Competitive Business. For corporate entities, the restriction is that they may not engage in any business other than the development and operation of Hyper Kidz Businesses.
The FDD specifies that a Competitive Business is one that offers the same or substantially similar products and services as those offered by a Hyper Kidz Business. This definition is crucial because it broadly restricts franchisees from operating or being involved in any similar entertainment or recreational business during their franchise agreement. This restriction applies 'anywhere', meaning it is not limited to a specific geographic area during the franchise term.
After the franchise is terminated or expires, the non-competition covenant remains in effect for two years within 15 miles of the Franchised Business or any other Hyper Kidz Business in the System. This post-term restriction is more geographically limited but still prevents former franchisees from directly competing with Hyper Kidz for a defined period after they leave the system. Franchisees should carefully consider these restrictions, as they could impact their future business ventures after their franchise agreement ends.