What is the exception to the transfer restrictions for Hyper Kidz development rights?
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.
Immediately after the death or permanent disability of such person, or while the rights granted under this Agreement is owned by an executor, administrator, guardian, personal representative or trustee of that person, the Developer's Hyper Kidz outlet(s) and remaining development schedule shall be supervised by an interim successor manager satisfactory to Franchisor, or Franchisor, in its sole discretion, may provide interim management at a fee equal to twenty percent (20%) of the Gross Revenue generated by the Developer's Hyper Kidz outlet(s) during Franchisor's operation thereof, plus any and all costs of travel, lodging, meals and other expenses reasonably incurred by Franchisor, pending transfer of the Developer's Hyper Kidz outlet(s) and remaining development schedule to the deceased or disabled individual's lawful heirs or successors.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the Development Rights granted are personal and generally cannot be sold, assigned, transferred, or encumbered, either in whole or in part. An exception exists in the event of the developer's death or permanent disability. In such cases, the executor, administrator, conservator, or other personal representative is required to transfer the developer's interest in the Multi-Unit Development Agreement within six months to a third party approved by Hyper Kidz.
Failure to transfer the rights within the specified six-month period following death or permanent disability constitutes a material default, leading to the termination of all rights granted under the agreement. This transfer, including those by devise or inheritance, remains subject to the conditions outlined for transfers within the agreement. However, transfers by gift, devise, or inheritance are subject to the terms in Section 11.
For the purposes of the Hyper Kidz agreement, "permanent disability" is defined as a mental or physical condition that prevents the developer from providing continuous and material supervision of the Hyper Kidz outlet(s) and maintaining the development schedule for a six-month period from the onset of the disability. During the period following death or disability, an interim successor manager, satisfactory to Hyper Kidz, must supervise the outlets and development schedule. Alternatively, Hyper Kidz may provide interim management, charging a fee equal to 20% of the Gross Revenue generated by the outlets, plus all associated travel and lodging expenses, until the transfer to the lawful heirs or successors is completed.