What happens if all of a Hyper Kidz multi-unit developer's Hyper Kidz Businesses stop operating?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| (c) Requirements for multi- | None | Not applicable | |
| unit developer to renew | |||
| or extend | |||
| (d) Termination by multi- | None | You may seek to terminate on any grounds | |
| unit developer | available to you at law | ||
| (e) Termination by | None | Not applicable | |
| franchisor without | |||
| cause | |||
| (f) Termination by | Section 9 | We can terminate if you commit any one of | |
| franchisor with cause | several listed violations | ||
| (g) “Cause” defined – curable defaults | Section 9 | If you use the Marks or System without our consent; participating in a Competitive Business; failure to pay money to us when due; you begin developing a Hyper Kidz Business before all of your pre-development obligations are met; failure to obtain our consent when required; you open any Hyper Kidz Business before a Franchise Agreement for that Hyper Kidz Business has been signed | |
| (h) “Cause” defined – non- curable defaults | Section 9 | Failure to meet your minimum performance schedule; failure to comply with applicable laws; if all of your Hyper Kidz Businesses stop operating; unauthorized transfer; you make a material misrepresentation to us; conviction by you or your Principals of an indictable offense; bankruptcy or insolvency; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 41–49)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, if all of a multi-unit developer's Hyper Kidz businesses cease operations, it constitutes a non-curable default under the Multi-Unit Development Agreement. This gives Hyper Kidz the right to terminate the agreement with cause, as detailed in Section 9.
This provision is significant for potential multi-unit developers as it highlights the importance of maintaining operational Hyper Kidz locations. The termination of the agreement means the developer would lose the rights to further develop Hyper Kidz businesses within their designated territory. This could result in a substantial loss of investment and future revenue opportunities.
It's important to note that this is a non-curable default, meaning the multi-unit developer does not have an opportunity to rectify the situation and prevent termination. Prospective multi-unit developers should carefully consider their ability to manage and sustain multiple Hyper Kidz locations before entering into such an agreement. They should also seek legal counsel to fully understand the implications of this clause and negotiate terms if possible.