When a Hyper Kidz franchisee receives an offer to sell, how soon must they submit a copy of the offer to Hyper Kidz?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
If you or any of your Principals shall at any time determine to sell an interest in this Agreement, the Franchise, the Hyper Kidz Business, some or all of the assets of the Hyper Kidz Business, other than inventory items in the ordinary course of business, or an Ownership Interest in you, you or your Principal(s) shall obtain a bona fide, arms-length, executed written offer and earnest money deposit in the amount of five percent (5%) or more of the offering price from a qualified, responsible, bona fide and fully disclosed purchaser. A true and complete copy of the offer and any proposed ancillary agreements shall immediately be submitted to us by you, such Principal(s) or both. The offer must apply only to an interest in this Agreement, the Franchise, the Hyper Kidz Business, the assets of the Hyper Kidz Business or you. It must
not include the purchase of any other property or rights of you or such Principal(s). If the offeror proposes to buy any other property or rights from you or such Principal(s) under a separate, contemporaneous offer, the price and terms of purchase offered to you or such Principal(s) for the interest in this Agreement, the Franchise, the Hyper Kidz Business, the assets of the Hyper Kidz Business or you shall reflect the bona fide price offered therefor and shall not reflect any value for any other property or rights. We shall have the right, which we may exercise by written notice delivered to you or such Principal(s) within forty-five (45) days from the date of delivery of an exact copy of such offer to us, to purchase such interest for the price and on the terms and conditions contained in such offer, provided that (a) we may substitute cash, a cash equivalent, or marketable securities of equal value for any form of payment proposed in such offer, (b) our credit shall be deemed equal to the credit of any proposed purchaser, and (c) we shall have not less than sixty (60) days to prepare for closing.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, if a franchisee or their principals decide to sell their interest in the franchise, the agreement, the Hyper Kidz business, or its assets, they must immediately submit a complete copy of the written offer to Hyper Kidz. This offer must be a bona fide, arms-length transaction with an earnest money deposit of at least five percent of the offering price from a qualified purchaser.
This requirement ensures that Hyper Kidz has the first opportunity to purchase the franchise under the same terms offered to a third party. This is known as the right of first refusal. The offer must pertain solely to the interest in the franchise and not include any other property or rights unless those are priced separately and accurately.
Hyper Kidz has 45 days from the date they receive the offer to decide whether to exercise their right to purchase the franchise. If Hyper Kidz decides to purchase the franchise, they can substitute cash or marketable securities for any proposed form of payment and will have at least 60 days to prepare for closing the transaction. This clause protects Hyper Kidz's interests and allows them to maintain control over who joins their franchise system.