Can Hyper Kidz operate Hyper Kidz Businesses outside the Designated Territory?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Except as expressly limited by the Franchise Agreement, we and our affiliates retain all rights with respect to Hyper Kidz Businesses, the Marks, and any products and services anywhere in the world including the right: (a) to produce, offer and sell and to grant others the right to produce, offer and sell the products offered at Hyper Kidz Businesses and any other goods through similar or dissimilar channels of distribution, both within and outside the Designated Territory, under trade and service marks other than the Marks and under any terms and conditions we deem appropriate; (b) to operate and to grant others the right to operate Hyper Kidz Businesses located outside the Designated Territory under any terms and conditions we deem appropriate and regardless of proximity to your Hyper Kidz Business; and (c) the right to acquire and operate a business with one or more indoor recreation facilities located or operating in your Designated Territory, but if we do acquire this business any facilities located or operating within your Designated Territory will not use the Marks.
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, Hyper Kidz retains the right to operate or franchise Hyper Kidz Businesses outside of a franchisee's designated territory. This means that while a franchisee is granted a specific territory, Hyper Kidz is not restricted from establishing other locations, regardless of their proximity to the franchisee's business. This is a fairly standard practice in franchising, as franchisors typically want to maintain the flexibility to expand their brand's reach. However, it's important for prospective franchisees to understand that their territory is not exclusive in the sense that Hyper Kidz itself could open competing locations nearby.
Hyper Kidz also retains all rights to the Hyper Kidz Businesses, marks, and any products and services anywhere in the world. They can produce, offer, and sell, and grant others the right to do the same, the products offered at Hyper Kidz Businesses and any other goods through similar or dissimilar channels of distribution, both within and outside the Designated Territory, under trade and service marks other than the Marks and under any terms and conditions they deem appropriate.
For a prospective Hyper Kidz franchisee, this means that Hyper Kidz has broad rights to operate and expand, even in ways that might compete with individual franchisees. While the Franchise Agreement does offer some territorial protection by preventing Hyper Kidz from establishing or licensing another Hyper Kidz Business within the franchisee's Designated Territory, there are exceptions. Furthermore, Hyper Kidz can still engage in other business activities, including selling products and services through alternative channels, even within a franchisee's territory. Therefore, it is crucial for potential franchisees to carefully evaluate the defined Designated Territory and understand the potential for competition from both Hyper Kidz and other franchisees.