Can the Hyper Kidz franchisor direct Internet Companies to terminate the franchisee's Electronic Advertising?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ctively, the "Telephone Listings") related to the Franchised Business or the Marks.
- 2.3 Transfer. On Termination of the Franchise Agreement, or on periodic request of Franchisor, Franchisee will immediately:
- 2.3.1 direct all internet service providers, domain name registries, internet search engines, social media companies, and other listing agencies (collectively, the "Internet Companies") with which Franchisee has Electronic Advertising: (i) to transfer all of Franchisee's interest in such Electronic Advertising to Franchisor; and (ii) to execute such documents and take such actions as may be necessary
to effectuate such transfer. In the event Franchisor does not desire to accept any or all such Electronic Advertising, Franchisee will immediately direct the Internet Companies to terminate such Electronic Advertising or will take such other actions with respect to the Electronic Advertising as Franchisor directs; and
- 2.3.2 direct all telephone companies, telephone directory publishers, and telephone directory listing agencies (collectively, the "Telephone Companies") with which Franchisee has Telephone Listings: (i) to transfer all Franchisee's interest in such Telephone Listings to Franchisor; and (ii) to execute such documents and take such actions as may be necessary to effectuate such transfer. In the event Franchisor does not desire to accept any or all such Telephone Listings, Franchisee will immediately direct the Telephone Companies to terminate such Telephone Listings or will take such other actions with respect to the Telephone Listings as Franchisor directs.
- 2.4 Appointment; Power of Attorney. Franchisee hereby constitutes and appoints Franchisor and any officer or agent of Franchisor, for Franchisor's benefit under the Franchise Agreement and this Agreement or otherwise, with full power of substitution, as Franchisee's true and lawful attorney-in-fact with full power and authority in Franchisee's place and stead, and in Franchisee's name or the name of any affiliated person or affiliated company of Franchisee, to take any and all appropriate action and to execute and deliver any and all documents that may be necessary or desirable to accomplish the purposes of this Agreement. Franchisee further agrees that this appointment constitutes a power coupled with an interest and is irrevocable until Franchisee has satisfied all of its obligations under the Franchise Agreement and any and all other agreements to which Franchisee and any of its affiliates on the one hand, and Franchisor and any of its affiliates on the other, are parties, including without limitation this Agreement.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz has the authority to direct Internet Companies to terminate a franchisee's Electronic Advertising under certain circumstances. Specifically, upon termination of the Franchise Agreement, Hyper Kidz can instruct Internet Companies to either transfer the franchisee's interest in Electronic Advertising to Hyper Kidz or, alternatively, to terminate the Electronic Advertising. This is part of Hyper Kidz's broader control over the brand's online presence and advertising.
This provision is outlined in Item 22, which details the contracts and agreements a franchisee must adhere to. The FDD specifies that franchisees acquire certain rights to domain names, social media accounts, and website listings related to the Hyper Kidz business during the franchise term. However, these rights are subject to Hyper Kidz's control, especially upon termination of the agreement.
For a prospective franchisee, this means that upon termination (whether voluntary or involuntary), Hyper Kidz has the right to take over or shut down all online advertising and listings associated with the franchise. This includes directing internet service providers, domain name registries, internet search engines, and social media companies to transfer or terminate the franchisee's Electronic Advertising. The franchisee is obligated to comply immediately with Hyper Kidz's directions and execute any necessary documents to facilitate the transfer or termination. This ensures that the Hyper Kidz brand maintains control over its online presence and prevents former franchisees from potentially misrepresenting themselves as current representatives of the brand.
Furthermore, Hyper Kidz retains the right to appoint themselves as the franchisee's attorney-in-fact to execute documents needed to transfer or terminate electronic advertising and telephone listings. This appointment is considered irrevocable until the franchisee has fulfilled all obligations under the Franchise Agreement. Hyper Kidz can provide a written statement as conclusive proof of termination to the Internet and Telephone Companies, streamlining the process of transferring or terminating the listings. This comprehensive control is designed to protect the Hyper Kidz brand and ensure a consistent message across all locations, even after a franchise relationship ends.