Can Hyper Kidz require franchisees to obtain confidentiality and/or non-competition agreements from their Principals or key employees, including the General Manager?

According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz may require franchisees to obtain confidentiality and non-competition agreements from their Principals and key employees, including the General Manager. Specifically, Hyper Kidz requires all Principals and employees who have access to confidential information to sign these agreements. Hyper Kidz will be a third-party beneficiary of these agreements and has the right to enforce their terms.

This requirement ensures that sensitive business information remains protected. Failure to procure the execution of these agreements constitutes a material breach of the Franchise Agreement. This means that franchisees must ensure that all relevant parties sign the required agreements to remain in compliance with the franchise terms.

Hyper Kidz also emphasizes that franchisees must disclose confidential information to their Principals and employees only to the extent reasonably necessary for operating the franchised business. This controlled dissemination of information helps to minimize the risk of unauthorized disclosure or misuse. Franchisees must also conduct background checks on prospective employees, ensuring they do not hire individuals with a history of certain crimes, further safeguarding the business and its customers.