Is prior written consent required from Hyper Kidz to transfer the agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
11.1 This Agreement is personal to you and you shall neither sell, assign, transfer nor encumber this Agreement, the Development Rights, or any other interest hereunder, nor suffer or permit any such assignment, transfer or encumbrance to occur directly, indirectly or contingently by agreement or by operation of law without our prior written consent. You understand that this Agreement may not be
pledged, mortgaged, hypothecated, given as security for an obligation or in any manner encumbered. The assignment or transfer of any interest, except in accordance with this Section shall constitute a material breach of this Agreement.
- 11.4 You acknowledge and agree that the restrictions on transfer imposed herein are reasonable and are necessary to protect the Development Rights, the System and the Marks, as well as our reputation and image, and are for the protection of us, you and other multi-unit developers and franchisees.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, franchisees must obtain prior written consent from Hyper Kidz to sell, assign, transfer, or encumber the Development Agreement, Development Rights, or any other interest. This requirement extends to any direct, indirect, or contingent transfer, whether by agreement or by operation of law. The agreement specifies that it is personal to the franchisee, reinforcing the need for franchisor approval for any transfer.
This provision means that a Hyper Kidz franchisee cannot freely transfer their rights and obligations under the Development Agreement without first getting the green light from Hyper Kidz. This allows Hyper Kidz to maintain control over who becomes a developer within their system, ensuring that any new developer meets their standards and is capable of fulfilling the obligations of the agreement.
Hyper Kidz emphasizes that these transfer restrictions are reasonable and necessary to protect the Development Rights, the System, the Marks, and the brand's reputation. They also protect Hyper Kidz, existing multi-unit developers, and franchisees. Any transfer without written consent from Hyper Kidz constitutes a material breach of the Development Agreement.