What happens if a Hyper Kidz developer is in default of the agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
9.1.9 If you or any of your affiliates cease to operate all of the Hyper Kidz Businesses opened pursuant to the terms of this Agreement.
9.2 Upon occurrence of any of the events stated in this Section 9.2, we may, without prejudice to any other rights or remedies contained in this Agreement or provided by law or equity, terminate this
Agreement. Such termination shall be effective thirty (30) days after written notice (or such other notice as may be required by applicable state law) is given by us to you of any of such events, if such defaults are not cured within such period:
- 9.2.1 If you shall use the System or Marks, or any other names, marks, systems, insignia, symbols or rights which are our property except pursuant to, and in accordance with, a valid and effective Franchise Agreement.
- 9.2.2 If you, shall have any interest, direct or indirect, in the ownership or operation of any arts and crafts business engaged in the sale of services similar to those permitted to be sold by you within the Development Area or in any business which looks like, copies or imitates the Hyper Kidz Business or operates in a manner tending to have such effect other than pursuant to a valid and effective Franchise Agreement.
- 9.2.3 If you shall fail to remit to us any payments pursuant to Section 2 when same are due.
- 9.2.4 If you shall begin work upon any Hyper Kidz Business at any site unless all the conditions stated in Section 3 hereof have been met.
- 9.2.5 If you fail to obtain our prior written approval or consent, including but not limited to site approval or site plan approval, as expressly required by this Agreement.
- 9.2.6 If you default in the performance of any other obligation under this Agreement.
- 9.2.7 If you open any Hyper Kidz Business for business before a Franchise Agreement for such Hyper Kidz Business has been fully executed.
- 9.2.8 If you fail to obtain execution of a covenant required by Section 12.8 below.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, several conditions can trigger a default of the Development Agreement. These include failing to meet the Minimum Performance Schedule for opening Hyper Kidz Businesses, using the Hyper Kidz System or Marks without a valid Franchise Agreement, having an interest in a similar arts and crafts business within the Development Area, failing to remit payments, starting work on a Hyper Kidz Business before meeting all conditions, failing to obtain required approvals, defaulting on any other obligation under the agreement, opening a Hyper Kidz Business before a Franchise Agreement is fully executed, or failing to obtain required covenants.
If any of these events occur, Hyper Kidz has the right to terminate the Development Agreement. This termination becomes effective 30 days after Hyper Kidz provides written notice to the developer, assuming the developer does not cure the default within that 30-day period, unless state law requires a different notice period. This termination is without prejudice to any other rights or remedies Hyper Kidz may have under the agreement or by law.
Additionally, if a Hyper Kidz developer ceases to operate all of their Hyper Kidz Businesses, this also constitutes an event of default. Upon termination of the Development Agreement, the developer must immediately cease selecting sites for Hyper Kidz Businesses and stop representing themselves as a multi-unit developer for Hyper Kidz. These stipulations ensure Hyper Kidz can protect its brand and operational standards, while also providing a defined process for addressing defaults by developers.
Prospective Hyper Kidz developers should carefully review Section 9 of the Development Agreement, as referenced in Item 23 of the FDD, to fully understand what constitutes a default and the potential consequences. Understanding these conditions is crucial for maintaining a compliant and successful business relationship with Hyper Kidz.