Regarding Hyper Kidz cooperatives, what happens in the event of a tie vote?

According to Hyper Kidz's 2024 Franchise Disclosure Document, cooperatives will include all Hyper Kidz businesses within a specific geographic area, encompassing those owned by the franchisor, its affiliates, and its franchisees. Each Hyper Kidz business gets one vote in the cooperative. However, to prevent any single entity from dominating decisions, no franchisee or group of franchisees under common control can hold more than 25% of the total vote, regardless of how many Hyper Kidz businesses they own.

The purpose of these cooperatives is not detailed in the provided FDD excerpt, but they typically involve collective decision-making on matters such as local marketing, advertising, and operational standards within the defined geographic area. These cooperatives allow franchisees to have a voice in decisions that impact their businesses and the overall brand presence in their region.

As of the date of the 2024 Disclosure Document, no cooperatives have been established. In the event that a vote within a Hyper Kidz cooperative results in a tie, the franchisor holds the tie-breaking vote. This provision ensures that decisions can be made even when the cooperative members are evenly divided, preventing potential gridlock and allowing the franchisor to guide the direction of the cooperative. A prospective franchisee should inquire about the types of decisions these cooperatives will make and how the franchisor intends to exercise its tie-breaking vote to understand the potential impact on their business.