Is payment of the Successor Agreement Fee a requirement for Hyper Kidz franchise renewal?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
the terms of the sale, we shall have an additional right of first refusal on the same terms and conditions as are applicable to the initial right of first refusal.
16.8 Ownership Structure and Initial Capitalization
You represent and warrant that your ownership structure and initial capitalization are as set forth on Attachment 7 hereto and covenant that you will not vary from that ownership structure without our prior written approval.
ARTICLE 17: GRANT OF SUCCESSOR FRANCHISES
17.1 Successor Agreement
If you satisfy each of the requirements set forth below, you may renew for one (1) additional term of ten (10) years.
- 17.1.1 You shall have been, throughout the initial term of this Agreement, in substantial compliance, and at the expiration of such initial term are in full compliance, with this Agreement, your lease or sublease and all other agreements between you and us or companies or persons associated or affiliated with us.
- 17.1.2 You shall, within six (6) months before the expiration of the initial term, but not later than three (3) months before the expiration of the initial term, provide written notice to us that you wish to sign a Successor Agreement, and we, in turn, shall provide you with any documents that you are required to execute for the successor term, which documents may include, but are not limited to, a general release, our Successor Agreement and all other ancillary agreements, instruments and documents then customarily used by us in the granting of Hyper Kidz Franchises and will require payment of the Successor Agreement Fee. (the "Successor Franchise Documents").
- 17.1.3 You shall execute the Successor Franchise Documents and all other documents and instruments that we require in order to renew. You shall return the executed Successor Franchise
Documents to us, together with payment of a Successor Agreement Fee equal to fifty percent (50%) of our then-current initial franchise fee, by no later than the expiration date of this Agreement. If we do not receive the executed documents and Successor Agreement Fee by such expiration date, then this Agreement shall expire, you shall have no further rights under this Agreement, and you shall comply with the provisions of Article 19 and any other provisions that survive termination or expiration of this Agreement.
17.1.4 After we have received from you all executed Successor Franchise Documents and the Successor Agreement Fee, we shall inspect your Hyper Kidz Business to determine the extent of any required updating, remodeling, redecorating or other refurbishment for the Hyper Kidz Business in order to bring the Hyper Kidz Business up to our then-current image and standards for new Hyper Kidz Businesses.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, payment of the Successor Agreement Fee is required for franchise renewal. To renew the franchise for an additional ten-year term, the franchisee must satisfy several requirements, including executing the Successor Franchise Documents and paying the Successor Agreement Fee.
The Successor Agreement Fee is equal to fifty percent (50%) of Hyper Kidz's then-current initial franchise fee. The franchisee must provide written notice of their intent to renew within six (6) months, but no later than three (3) months, before the expiration of the initial term. All executed documents and the Successor Agreement Fee must be submitted by the expiration date of the current agreement.
After receiving the required documents and fee, Hyper Kidz will inspect the business to determine if any updates, remodeling, redecorating, or refurbishment is needed to meet the current standards for new Hyper Kidz locations. The franchisee will then have six (6) months to complete these modifications. Failure to pay the Successor Agreement Fee or make the required modifications can result in the termination of the Successor Franchise Documents and the expiration of the franchise agreement.