What happens in the event of death or disability of a Hyper Kidz multi-unit developer?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| (l) Franchisor approval of transfer by multi-unit developer | Section 11 | We have the right to approve all transfers, our consent not to be unreasonably withheld | |
| (m) Conditions for franchisor approval of transfer | Section 11 | Conditions for transfer include not being in default, at least 25% of all Hyper Kidz Businesses required to be developed are open or under construction, all debts are paid, the buyer meets our current criteria for new multi-unit developers, you sign a general release, payment of transfer fee, buyer personally guarantees all obligations | |
| (n) Franchisor’s right of first refusal to acquire multi-unit developer’s business | Section 11 | We have the right to match the offer to purchase your business | |
| (o) Franchisor’s option to | Not applicable | Not applicable | |
| purchase multi-unit | |||
| developer’s business | |||
| (p) Death or disability of | Section 11 | Interest must be transferred to an approved party | |
| multi-unit developer | within 12 months |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 41–49)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, in the event of the death or disability of a multi-unit developer, the interest in the Multi-Unit Development Agreement must be transferred to an approved party within 12 months. This means that the rights and obligations of the agreement do not automatically pass to the developer's heirs or estate. Instead, Hyper Kidz retains control over who becomes the new developer.
This provision protects Hyper Kidz by ensuring that any new developer meets their standards and is capable of fulfilling the development obligations. The brand needs to approve the party to whom the interest is transferred. This approval process likely involves assessing the potential transferee's financial capabilities, business experience, and overall suitability as a Hyper Kidz developer.
For a prospective multi-unit developer, this clause highlights the importance of succession planning. Developers should consider establishing a clear plan for transferring their interest in the event of death or disability, identifying potential transferees who would be likely to gain Hyper Kidz's approval. The 12-month timeframe provides some flexibility, but it also creates a sense of urgency to ensure a smooth transition and avoid any disruption to the development schedule. This also underscores the importance of having proper legal and financial advice to navigate such a transfer.