Does Hyper Kidz offer exclusive territories to its franchisees?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Your Franchise Agreement will specify the site that will be the Approved Location for your Hyper Kidz Business. Your Franchise Agreement will also specify a Designated Territory, which will be a minimum of 65,000 kids ages 13 & under within a 15-mile radius (Driving Distance), whichever comes first around the Approved Location. Your Designated Territory may be described in terms of street, municipal or other boundaries, and may be depicted on a map that is attached to your Franchise Agreement. If you do not yet have a location at the signing of the Franchise Agreement, you will receive a non-exclusive site search area list as Attachment 3.
During the term of the Franchise Agreement, we will not establish or operate, nor license any other person to establish or operate, a Hyper Kidz Business in your Designated Territory, except as may be permitted under the Franchise Agreement and those exceptions are described below. Your territorial protection does not depend on your achieving a certain sales volume, market penetration, or other factor, other than compliance with the Franchise Agreement.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, franchisees do not receive an exclusive territory. The Franchise Agreement specifies a Designated Territory, which is a minimum of 65,000 kids ages 13 & under within a 15-mile radius (Driving Distance) around the Approved Location, whichever comes first. Hyper Kidz will not establish or operate, nor license any other person to establish or operate, a Hyper Kidz Business in your Designated Territory, with some exceptions.
Even with a Designated Territory, franchisees may face competition from other franchisees, outlets that Hyper Kidz owns, other channels of distribution, or competitive brands that Hyper Kidz controls. Hyper Kidz and its affiliates retain the rights to offer and sell products and services, and grant others the right to do the same, both within and outside the Development Area, under trade and service marks other than the Hyper Kidz marks. They also retain the right to acquire and operate a business with one or more indoor recreation facilities located or operating in your Designated Territory, as long as these facilities do not use the Hyper Kidz marks.
Hyper Kidz retains the right to sell products and services under the Proprietary Marks within and outside a franchisee's Designated Territory through any method of distribution other than a dedicated Hyper Kidz Business, including sales through the internet, catalog sales, telemarketing, or other direct marketing sales. Franchisees may sell to customers who live anywhere but choose to use their Franchised Business, but they may not directly solicit customers outside of their Designated Territory.
For franchisees entering into a Multi-Unit Development Agreement, exclusivity within the Development Area is granted, meaning Hyper Kidz will not operate or grant a franchise for the operation of Hyper Kidz Businesses to be located within the Development Area. However, this exclusivity can be terminated if the franchisee fails to comply with the terms and conditions of the Multi-Unit Development Agreement and all Franchise Agreements signed under it. Upon expiration of the Multi-Unit Development Agreement, exclusive rights terminate, and Hyper Kidz has the right to operate or grant others the rights to develop and operate Hyper Kidz Businesses within the Development Area, subject to the franchisee's right of first refusal to develop additional Hyper Kidz Businesses.