What constitutes 'permanent disability' in the context of a Hyper Kidz multi-unit development agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.6 The grant of rights under this Agreement is personal to Developer, and on the death or permanent disability of Developer, the executor, administrator, conservator, or other personal representative of Developer shall be required to transfer Developer's interest in this Agreement within six (6) months from the date of death or permanent disability to a third party approved by Franchisor. Failure to transfer in accordance with the forgoing will constitute a material default and all that is granted by this Agreement will terminate. A transfer under this Section 11.6, including without limitation, transfer by devise or inheritance, is subject to the conditions for Transfers in this Article 11 and unless transferred by gift, devise, or inheritance, subject to the terms of Section 11 above. For purposes of this Agreement, the term "permanent disability" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent such person from providing continuous and material supervision of the operation of Developer's Hyper Kidz outlet(s) and remaining development schedule during the six (6)-month period from its onset.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the term 'permanent disability' within the context of a multi-unit development agreement refers to a mental or physical condition that either prevents or is reasonably expected to prevent the developer from providing continuous and material supervision of the Hyper Kidz outlet(s) and the remaining development schedule. This condition must persist for a six-month period from its onset to be considered a 'permanent disability' under the agreement.
This definition has significant implications for a Hyper Kidz multi-unit developer. If a developer experiences a qualifying disability, their executor, administrator, conservator, or other personal representative is required to transfer the developer's interest in the agreement within six months from the date of the disability. Failure to transfer the interest within this timeframe constitutes a material default, leading to the termination of all rights granted by the agreement.
The transfer of the agreement under these circumstances is subject to Hyper Kidz's standard transfer conditions. During the period following the disability, Hyper Kidz may require the developer's outlet(s) to be supervised by an interim successor manager approved by Hyper Kidz. Alternatively, Hyper Kidz may provide interim management themselves, charging a fee equal to 20% of the gross revenue generated by the outlet(s), plus any associated costs for travel, lodging, meals, and other expenses. This arrangement remains in effect until the transfer of the outlet(s) and remaining development schedule to the lawful heirs or successors of the disabled individual.