What happens upon the expiration of the term of the Hyper Kidz Multi-Unit Development Agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
grounds for either a loss of territorial exclusivity or a termination of the Multi-Unit Development Agreement.
In addition, upon the expiration of the term of the Multi-Unit Development Agreement, which is when the last Hyper Kidz Business to be developed within the Development Area opens for business, your exclusive rights under the Multi-Unit Development Agreement with respect to the Development Area will terminate and we and our affiliates will have the right to operate and to grant to others development rights and franchises to develop and operate Hyper Kidz Businesses within the Development Area. This right will be subject only to the territorial rights under the Franchise Agreements signed by you for Hyper Kidz Businesses in the Development Area and your right of first refusal to develop additional Hyper Kidz Businesses, as described above. The Development Area may not be altered unless we and you mutually agree to do so. There are no minimum sales goals, market penetration or other contingency that you must meet to keep the exclusivity of your Development Area, except that you must meet your minimum performance schedule.
Item 13: TRADEMARKS
The Franchise Agreement grants you the right to use certain trademarks, trade names, service marks, symbols, emblems, logos and indicia of origin designated by us. These Marks may be used only in the manner we authorize and only for the operation of your Franchised Business. The Multi-Unit Development Agreement does not grant to you any right to use the Marks.
You may not use the Marks as a part of your corporate or other legal name, and you must comply with our instructions in filing and maintaining trade name or fictitious name registrations. You must sign any documents we require to protect the Marks or to maintain their continued validity and enforceability. In addition, you may not directly or indirectly contest the validity of our ownership of or our rights in and to the Marks.
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, the Multi-Unit Development Agreement expires when the last Hyper Kidz Business to be developed within the Development Area opens. At that point, the franchisee's exclusive rights to the Development Area terminate. Hyper Kidz and its affiliates then have the right to operate and grant development rights and franchises to others within that area.
This is subject to the territorial rights under the Franchise Agreements already signed for Hyper Kidz Businesses in the Development Area. The franchisee also retains a right of first refusal to develop additional Hyper Kidz Businesses. If Hyper Kidz believes it is desirable to establish more businesses in the area and the franchisee has complied with the terms of the Multi-Unit Development Agreement and Franchise Agreements, Hyper Kidz will offer the franchisee the right to develop these additional locations.
The franchisee has 60 days to exercise this option fully after receiving notice from Hyper Kidz. If the franchisee declines or does not respond within the 60-day period, Hyper Kidz can sell the development rights to another multi-unit developer or develop the businesses themselves.
To maintain rights under the Multi-Unit Development Agreement, the franchisee must have the agreed-upon cumulative number of Hyper Kidz Businesses open and operating by the dates specified in the minimum performance schedule. Failure to meet this schedule can result in the loss of territorial exclusivity or termination of the Multi-Unit Development Agreement.