Can Hyper Kidz franchisees face competition from other channels of distribution that Hyper Kidz controls?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ertain 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.
If, during the term of the Franchise Agreement, you wish to relocate your Hyper Kidz Business, or if your Hyper Kidz Business is damaged or destroyed and cannot be repaired within 60 days, you must submit to us in writing the materials we require to consider your request, including information concerning
the proposed new location for your Hyper Kidz Business. You must also meet certain other requirements, such as being in compliance with the Franchise Agreement, the location meets our then-current requirements for a Hyper Kidz Business and is located within your Designated Territory, and you must sign our then-current form of Franchise Agreement. If we permit you to relocate, you will not pay a new initial franchise fee when you sign the new Franchise Agreement. We do not charge a relocation fee.
Except as expressly limited by the Franchise Agreement, we and our affiliates retain all rights with respect to Hyper Kidz Businesses, the Marks, and any products and services anywhere in the world including the right: (a) to produce, offer and sell and to grant others the right to produce, offer and sell the products offered at Hyper Kidz Businesses and any other goods through similar or dissimilar channels of distribution, both within and outside the Designated Territory, under trade and service marks other than the Marks and under any terms and conditions we deem appropriate; (b) to operate and to grant others the right to operate Hyper Kidz Businesses located outside the Designated Territory under any terms and conditions we deem appropriate and regardless of proximity to your Hyper Kidz Business; and (c) the right to acquire and operate a business with one or more indoor recreation facilities located or operating in your Designated Territory, but if we do acquire this business any facilities located or operating within your Designated Territory will not use the Marks.
You may sell our products and services to customers who live anywhere but who choose to use your Franchised Business. You may not engage in any promotional activities or sell our products or services, whether directly or indirectly, through or on the internet, the world wide web, or any other similar proprietary or common carrier electronic delivery system, except for party bookings made through our website; through catalogs or other mail order devices sent or directed to customers or prospective customers located anywhere;
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, franchisees may face competition from other channels of distribution that Hyper Kidz controls. Specifically, Hyper Kidz and its affiliates retain the right to sell products and services under their trademarks both within and outside a franchisee's designated territory through various methods of distribution beyond dedicated Hyper Kidz businesses. These alternative distribution channels include internet sales, catalog sales, telemarketing, and other direct marketing sales.
This means that while a franchisee is granted a designated territory, Hyper Kidz can still operate or license others to operate Hyper Kidz businesses outside of that territory. Moreover, Hyper Kidz can sell products and services through alternative channels within the franchisee's territory. The franchisee will not receive any compensation for sales made through these alternative distribution channels, including online sales, even if the order originates from or is delivered within their designated territory.
Hyper Kidz also retains ownership of all leads generated through their website. While they intend to forward inquiries to the appropriate Hyper Kidz business, the franchisee is not entitled to any revenue from these leads if they choose not to respond or fulfill the request. This allows Hyper Kidz, its affiliates, or other franchisees to fulfill the request instead.
These stipulations highlight the importance of understanding the scope of territorial protection offered by Hyper Kidz. While franchisees are granted a designated territory, they must be aware that Hyper Kidz retains significant rights to operate and sell through other channels, potentially creating competition within the franchisee's own market. Prospective franchisees should carefully consider these factors and evaluate the potential impact on their business before investing in a Hyper Kidz franchise.