Does the expiration or termination of the Hyper Kidz Franchise Agreement release the franchisee from accrued liabilities?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
nds for termination set forth in this Agreement do not constitute "good cause" for termination within the meaning ascribed to that term
by any applicable law or regulation. We shall not be precluded from contesting the validity, enforceability or application of such laws or regulations in any action, hearing or proceeding relating to this Agreement or the termination of this Agreement.
ARTICLE 19: RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION
19.1 Payment of Amounts Owed to Us and Our Affiliates
You shall immediately pay to us and our Affiliates upon termination or expiration of this Agreement such Royalty Fees, Brand Development Fees
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, the expiration or termination of the Franchise Agreement does not release a franchisee from accrued liabilities. Upon termination or expiration, the franchisee must immediately pay all outstanding Royalty Fees, Brand Development Fees, amounts owed for purchases from Hyper Kidz or its affiliates, any interest due, and all other unpaid amounts.
Moreover, certain obligations continue even after the agreement ends. These include ceasing the use of confidential information, adhering to non-compete clauses, and fulfilling any obligations that expressly survive the termination or expiration of the agreement until they are fully satisfied or naturally expire. This means that franchisees must understand that financial and legal responsibilities extend beyond the active term of the franchise agreement.
This requirement is standard in franchising, as franchisors need to ensure that all financial obligations are met and that proprietary information is protected even after a franchise ceases operation. Prospective Hyper Kidz franchisees should carefully review Article 19 of the Franchise Agreement to fully understand their responsibilities upon termination or expiration, and potentially consult with a legal or financial advisor to assess the implications.