What is required to maintain rights under the Hyper Kidz Multi-Unit Development Agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ell these development rights to another multi-unit developer or to develop the Hyper Kidz Businesses ourselves.
To maintain your rights under the Multi-Unit Development Agreement you must have open and in operation the cumulative number of Hyper Kidz Businesses stated on the minimum performance schedule by the dates agreed upon in the minimum performance schedule. Failure to do so will be grounds for either a loss of territorial exclusivity or a termination of the Multi-Unit Development Agreement.
In addition, upon the expiration of the term of the Multi-Unit Development Agreement, which is when the last Hyper Kidz Business to be developed within the Development Area opens for business, your exclusive rights under the Multi-Unit Development Agreement with respect to the Development Area will terminate and we and our affiliates will have the right to operate and to grant to others development rights and franchises to develop and operate Hyper Kidz Businesses within the Development Area. This right will be subject only to the territorial rights under the Franchise Agreements signed by you for Hyper Kidz Businesses in the Development Area and your right of first refusal to develop additional Hyper Kidz Businesses, as described above.
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, to maintain rights under the Multi-Unit Development Agreement, a franchisee must have the cumulative number of Hyper Kidz businesses open and operating by the dates agreed upon in the minimum performance schedule. This schedule is part of the Multi-Unit Development Agreement. Failure to meet this schedule can result in the loss of territorial exclusivity or termination of the Multi-Unit Development Agreement.
After the last Hyper Kidz business under the minimum performance schedule opens, the Multi-Unit Development Agreement expires. If Hyper Kidz believes it is desirable to establish additional businesses within the Development Area and the franchisee has complied with the terms of the Multi-Unit Development Agreement and Franchise Agreements, Hyper Kidz will offer the franchisee the right to develop these additional businesses. The franchisee has 60 days after notice to exercise this option in full. If the franchisee does not exercise or declines this right, Hyper Kidz can sell the development rights to another multi-unit developer or develop the businesses themselves.
This means that a Hyper Kidz multi-unit franchisee's ability to expand within their designated area depends on their adherence to the agreed-upon development timeline. Failing to open the required number of locations on time puts the franchisee at risk of losing their exclusive development rights and potentially the entire agreement. However, successful adherence to the schedule provides an opportunity to further expand within the Development Area, subject to Hyper Kidz's approval and the franchisee's compliance with the agreements.