Do the Hyper Kidz franchisee's representations and warranties survive any termination or expiration of the Hyper Kidz Franchise Agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
umber of shares of that class of securities issued and outstanding.
- 19.4.3 The restrictions of Section 19.4.1 shall not be construed to prohibit you, any Principal of yours or any member of your respective immediate families from having a direct or indirect ownership interest in any Hyper Kidz Business Franchise Agreement for the operation of any Hyper Kidz Business, or any entity owning, controlling or operating a Hyper Kidz Business or from providing services to a Hyper Kidz Business.
19.5 Continuing Obligations
All obligations of ours and yours which expressly or by their nature survive or are intended to survive the expiration or termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire.
19.6 Our Right to Purchase Assets of the Hyper Kidz Business
Upon termination of this Agreement by us in accordance with its terms and conditions or upon expiration of this Agreement without the grant of a Renewal Franchise, we shall have the option to purchase from you all or a portion of the assets used in the Hyper Kidz Business. We may exercise this option by giving written notice thereof within sixty (60) days from the date of such expiration or termination.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the obligations outlined in the franchise agreement that are intended to survive its termination or expiration will remain in effect. Specifically, all obligations of both the franchisee and Hyper Kidz that expressly or by their nature are meant to continue beyond the agreement's end will do so until they are fully satisfied or naturally expire. This ensures that certain responsibilities and duties do not simply vanish once the agreement is no longer active.
This continuation of obligations is a fairly standard practice in franchising. It typically covers aspects like confidentiality, non-compete clauses, and payment of outstanding dues. For a Hyper Kidz franchisee, this means that even after the franchise agreement ends, they must still uphold certain responsibilities. For example, they cannot use confidential information learned during their time as a franchisee or operate a competing business within a specified radius of another Hyper Kidz location for a certain period.
Additionally, upon termination or expiration, Hyper Kidz has the option to purchase the assets of the Hyper Kidz Business. If Hyper Kidz exercises this option, they are entitled to customary warranties and representations from the franchisee regarding the assets. These include assurances about ownership, condition, title, liens, encumbrances, validity of contracts, and any contingent liabilities associated with the assets. This protects Hyper Kidz from assuming unforeseen risks or liabilities when acquiring the assets of a former franchise.
In summary, the survival of certain obligations and the representations related to asset sales provide a framework for a smooth transition upon the end of the franchise agreement. It ensures that both Hyper Kidz and the franchisee continue to honor specific commitments and responsibilities, safeguarding the interests of both parties involved.