Does Hyper Kidz reserve the right to modify the 'System' that Hyper Kidz Businesses feature?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
You understand and agree that the System must not remain static if it is to meet, without limitation, presently unforeseen changes in technology, competitive circumstances, demographics, populations, consumer trends, societal trends and other market place variables, and if it is to best serve the interests of us, you and all other franchisees. Accordingly, you expressly understand and agree that we may from time to time change the components of the System including, but not limited to, altering the products, programs, services, methods, standards, forms, policies and procedures of that System; abandoning the System altogether in favor of another system in connection with a merger, acquisition, other business combination or for other reasons; adding to, deleting from or modifying those products, programs and services which your Hyper Kidz Business is authorized and required to offer; modifying or substituting entirely the building, premises, equipment, signage, trade dress, decor, color schemes and uniform specifications and all other unit construction, design, appearance and operation attributes which you are required to observe hereunder; and changing, improving, modifying or substituting the Marks. You expressly agree to comply with any such modifications, changes, additions, deletions, substitutions and alterations; provided, however, that such changes shall not materially and unreasonably increase your obligations hereunder.
You shall accept, use and effectuate any such changes or modifications to, or substitution of, the System as if they were part of the System at the time that this Agreement was executed.
We shall not be liable to you for any expenses, losses or damages sustained by you as a result of any of the modifications contemplated hereby. You hereby covenant not to commence or join in any litigation or other proceeding against us or any third party complaining of any such modifications or seeking expenses, losses or damages caused thereby. Finally, you expressly waive any claims, demands or damages arising from or related to the foregoing activities including, without limitation, any claim of breach of contract, breach of fiduciary duty, fraud, and/or breach of the implied covenant of good faith and fair dealing.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz retains the right to modify the System. The FDD states that Hyper Kidz may change components of the System to adapt to changes in technology, competition, demographics, consumer trends, and other market variables. These modifications may include altering products, programs, services, methods, standards, forms, policies, and procedures. Hyper Kidz can also abandon the System altogether in favor of another system due to a merger, acquisition, or other business combination.
Hyper Kidz is authorized to add to, delete from, or modify the products, programs, and services that a Hyper Kidz Business is authorized and required to offer. They can also modify or substitute the building, premises, equipment, signage, trade dress, decor, color schemes, uniform specifications, and all other unit construction, design, appearance, and operation attributes. Additionally, Hyper Kidz can change, improve, modify, or substitute the Marks. Franchisees must comply with any such modifications, changes, additions, deletions, substitutions, and alterations.
The franchisee is required to accept and implement any changes or modifications to the System as if they were part of the System at the time the Franchise Agreement was executed. Hyper Kidz is not liable for any expenses, losses, or damages sustained by the franchisee as a result of any of these modifications. The franchisee agrees not to commence or join any litigation against Hyper Kidz or any third party complaining of any such modifications or seeking expenses, losses, or damages caused thereby and waives any claims, demands, or damages arising from these activities, including claims of breach of contract, breach of fiduciary duty, fraud, and/or breach of the implied covenant of good faith and fair dealing. However, such changes shall not materially and unreasonably increase the franchisee's obligations.
This clause is typical in franchise agreements, as it allows the franchisor to keep the brand relevant and competitive. However, it also places a degree of risk on the franchisee, who must be prepared to adapt to changes and potentially incur costs to implement them. Prospective franchisees should carefully consider this clause and discuss with existing franchisees how Hyper Kidz has historically managed system modifications and any associated costs.