Can Hyper Kidz operate the Brand Development Fund through a separate entity?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
- (g) We will have the right to cause the Fund to be incorporated or operated through an entity separate from us at such time as we deem appropriate, and such successor entity shall have all our rights and duties pursuant to this Section.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz retains the right to have the Brand Development Fund operated through a separate entity. Specifically, Hyper Kidz can choose to incorporate the fund or operate it through an entity separate from themselves when they deem it appropriate. If Hyper Kidz chooses to do so, this successor entity will assume all of Hyper Kidz's rights and duties related to the Brand Development Fund.
This means that franchisees may be dealing with a different legal entity regarding the Brand Development Fund at some point during their franchise agreement. It is within Hyper Kidz's discretion to make this change, giving franchisees little control over this decision.
However, the FDD stipulates that all sums paid into the fund by franchisees, along with any income earned by the fund, must be kept in an account separate from Hyper Kidz's other funds. These funds can only be used for the purposes outlined in the franchise agreement. Hyper Kidz also states that they will provide franchisees with an unaudited statement detailing the fund's income and expenses within 120 days following the close of each fiscal year, giving franchisees some visibility into how the fund is being managed, regardless of whether it is managed directly by Hyper Kidz or a separate entity.