If Hyper Kidz reduces the scope of a non-compete covenant, does the franchisee's consent matter?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
12.4 You understand and acknowledge that we shall have the right, in our sole discretion, to reduce the scope of any covenant stated in Sections 12.1 and 12.2 or any portion thereof, without your consent, effective immediately upon receipt by you of written notice thereof, and you agree that you shall comply forthwith with any covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Section 16 hereof.
12.5 You expressly agree that the existence of any claim you may have against us, whether or not arising from this Agreement, shall not constitute a defense to our enforcement of the covenants in this Section 12.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz has the authority to unilaterally reduce the scope of the non-compete covenants outlined in Sections 12.1 and 12.2 of the franchise agreement. This means Hyper Kidz can modify the restrictions on a franchisee's activities without needing their explicit consent. This modification becomes effective immediately once the franchisee receives written notice.
This provision gives Hyper Kidz significant flexibility to adjust the non-compete terms as they see fit. For a potential franchisee, this means the non-compete obligations could change during the term of the agreement. It is important to understand that the franchisee must comply with the modified covenant immediately upon notification.
Franchisees should be aware that they are obligated to comply with the modified covenant, regardless of whether they agree with the changes. This is a departure from typical contract law, where modifications usually require mutual consent. The franchisee's only recourse would be to argue that the modification is unreasonable or made in bad faith, which can be a difficult legal challenge. Franchisees also expressly agree that any claims against Hyper Kidz will not be a defense for compliance with Section 12 covenants.