How is the Designated Territory for a Hyper Kidz franchise described?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Your Franchise Agreement will specify the site that will be the Approved Location for your Hyper Kidz Business. Your Franchise Agreement will also specify a Designated Territory, which will be a minimum of 65,000 kids ages 13 & under within a 15-mile radius (Driving Distance), whichever comes first around the Approved Location. Your Designated Territory may be described in terms of street, municipal or other boundaries, and may be depicted on a map that is attached to your Franchise Agreement. If you do not yet have a location at the signing of the Franchise Agreement, you will receive a non-exclusive site search area list as Attachment 3.
During the term of the Franchise Agreement, we will not establish or operate, nor license any other person to establish or operate, a Hyper Kidz Business in your Designated Territory, except as may be permitted under the Franchise Agreement and those exceptions are described below. Your territorial protection does not depend on your achieving a certain sales volume, market penetration, or other factor, other than compliance with the Franchise Agreement.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the Designated Territory is specified in the Franchise Agreement and consists of a minimum of 65,000 kids ages 13 and under within a 15-mile radius (Driving Distance) around the Approved Location, whichever comes first. The territory may be defined by streets, municipal boundaries, or other boundaries, and may be shown on a map attached to the Franchise Agreement. If a location is not yet determined when signing the Franchise Agreement, the franchisee will receive a non-exclusive site search area list.
During the term of the Franchise Agreement, Hyper Kidz will not establish or operate, nor license anyone else to establish or operate, a Hyper Kidz Business in the franchisee's Designated Territory, except as permitted under the Franchise Agreement. This territorial protection is contingent upon compliance with the Franchise Agreement, not on achieving specific sales volumes or market penetration. However, the FDD clearly states that the territory is not exclusive, meaning franchisees may face competition from other franchisees, company-owned outlets, or other channels of distribution or competitive brands controlled by Hyper Kidz.
It's important to note that Hyper Kidz retains various rights, including the right to offer and sell products and services through other channels of distribution, such as the internet or catalogs, both within and outside the Designated Territory. Franchisees will not receive compensation for sales made through these alternative distribution channels, including sales made through the Hyper Kidz website, even if the order originates from or is delivered within their Designated Territory. The franchisee also cannot directly solicit customers outside of their Designated Territory.
Hyper Kidz may offer a franchisee a right of first refusal to purchase a Franchised Business in an area contiguous to their Designated Territory if they are in full compliance with the Franchise Agreement, have paid all fees on time for the preceding 12 months, and are deemed financially capable of operating another Hyper Kidz Business. The franchisee has 30 days to notify Hyper Kidz of their decision. If they decline or fail to respond within the 30-day period, Hyper Kidz is free to sell the Franchised Business to another prospective franchisee.