How long does the developer have to exercise the right of first refusal for additional Hyper Kidz businesses?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
e of these businesses is located within your Development Area, it will not operate using the Proprietary Marks.
After the last Hyper Kidz Business under the minimum performance schedule has opened, your Multi-Unit Development Agreement will expire. At this time if we believe that it is desirable to establish additional Hyper Kidz Businesses within the Development Area, and if you complied with the terms of your Multi-Unit Development Agreement and are in compliance with your Franchise Agreements, we will offer you the right to develop these additional Hyper Kidz Businesses. You must exercise this option, in full, within 60 days after our notice to you. If you do not exercise or you decline this right of first refusal, we shall have the right to sell these development rights to another multi-unit developer or to develop the Hyper Kidz Businesses ourselves.
To maintain your rights under the Multi-Unit Development Agreement you must have open and in operation the cumulative number of Hyper Kidz Businesses stated on the minimum performance schedule by the dates agreed upon in the minimum performance schedule. Failure to do so will be 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.
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, a multi-unit developer has 60 days to exercise their right of first refusal to develop additional Hyper Kidz businesses within their development area. This right is offered if Hyper Kidz believes it is desirable to establish additional locations in the area after the last location under the minimum performance schedule has opened. To be eligible, the developer must have complied with the terms of their Multi-Unit Development Agreement and be in compliance with their Franchise Agreements.
If the multi-unit developer does not exercise this option within the 60-day period or declines the right, Hyper Kidz reserves the right to sell these development rights to another multi-unit developer or to develop the locations themselves. This clause ensures that Hyper Kidz retains control over the expansion of the brand and can pursue development opportunities even if the current developer is unable or unwilling to do so.
For a single-unit franchisee, if Hyper Kidz has a prospective franchisee interested in establishing a Hyper Kidz Business in an area contiguous to the franchisee's Designated Territory, Hyper Kidz may offer the franchisee a right of first refusal to purchase the additional Franchised Business. The franchisee has 30 days to notify Hyper Kidz whether they will purchase the additional Franchised Business. To be eligible, the franchisee must be in full compliance with the Franchise Agreement, have paid all fees owed to Hyper Kidz in full and not have been late during the immediately preceding 12 month period, and Hyper Kidz must believe the franchisee is financially capable of constructing and operating another Hyper Kidz Business. If the franchisee declines the right of first refusal, or fails to notify Hyper Kidz within the 30-day period, Hyper Kidz will be free to sell the Franchised Business to the prospective franchisee.