Does the Hyper Kidz franchise agreement confer rights or remedies to any third party?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.3 Except as provided in Section 11.2, if you receive from an unaffiliated third party and desires to accept a bona fide written offer to purchase your business, Development Rights and interests, we shall have the option, exercisable within thirty (30) days after receipt of written notice setting forth the name and address of the prospective purchaser, the price and terms of such offer, and a copy of such offer and the other information stated in this Section 11.3, to purchase such business, Development Rights and interests, including your right to develop sites within the Development Area, on the same terms and conditions as offered by said third party.
In order that we may have information sufficient to enable us to determine whether to exercise this option, we may require you to deliver to us certified financial statements as of the end of your most recent fiscal year and such other information about your business and operations as we may request.
If we decline, or do not accept the offer in writing within thirty (30) days, you may, within thirty (30) days from the expiration of the option period, sell, assign and transfer your business, Development Rights and interest to said third party, provided we have consented to such transfer as required by this Section 11.
Any material change in the terms of the offer prior to closing of the sale to such third party shall constitute a new offer, subject to the same rights of first refusal by us or our nominee, as in the case of an initial offer.
Our failure to exercise the option afforded by this Section 11.3 shall not constitute a waiver of any other provision of this Agreement, including all of the requirements of this Section with respect to the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
Based on the 2024 Hyper Kidz Franchise Disclosure Document, the franchise agreement addresses situations where third parties are involved, particularly in the context of transferring the development rights. Specifically, if a franchisee receives a bona fide written offer from an unaffiliated third party to purchase their business, development rights, and interests, Hyper Kidz has the option to purchase these rights on the same terms and conditions as the third party's offer. This is known as a right of first refusal.
The Hyper Kidz agreement stipulates that the franchisee must provide written notice to Hyper Kidz, including the prospective purchaser's name and address, the price and terms of the offer, and a copy of the offer. Hyper Kidz then has 30 days to exercise its option to purchase the business, development rights, and interests. If Hyper Kidz declines or fails to accept the offer in writing within this period, the franchisee may proceed to sell, assign, and transfer their business to the third party, provided that Hyper Kidz has consented to the transfer.
Furthermore, any material change in the terms of the offer before the sale to the third party constitutes a new offer, which is again subject to Hyper Kidz's right of first refusal. The agreement also states that Hyper Kidz's failure to exercise its option in one instance does not waive any other provisions of the agreement, including all requirements related to the proposed transfer. This ensures that Hyper Kidz retains control over who enters their franchise system and protects the brand's integrity and reputation.