Does Hyper Kidz have the right to assign its option to purchase the assets of my Hyper Kidz Business to another party?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon termination of this Agreement by us in accordance with its terms and conditions or upon expiration of this Agreement without the grant of a Renewal Franchise, we shall have the option to purchase from you all or a portion of the assets used in the Hyper Kidz Business. We may exercise this option by giving written notice thereof within sixty (60) days from the date of such expiration or termination. Assets shall include, without limitation, leasehold improvements, equipment, furniture, fixtures, signs, inventory and the lease or sublease for the Site. We shall have the unrestricted right to assign this option to purchase. We or our assignee shall be entitled to all customary warranties and representations given by the seller of a business including, without limitation, representations and warranties as to (a) ownership, condition and title to assets; (b) liens and encumbrances relating to the assets; (c) validity of contracts inuring to us or affecting the assets; and (d) contingent or other liabilities.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, Hyper Kidz has the unrestricted right to assign its option to purchase a franchisee's assets to another party. This means that if Hyper Kidz terminates the Franchise Agreement or it expires without renewal, Hyper Kidz can choose to buy the assets of the Hyper Kidz Business, including leasehold improvements, equipment, furniture, fixtures, signs, inventory, and the lease or sublease for the site. However, Hyper Kidz can also assign this right to another entity.
If Hyper Kidz exercises this option, either directly or through an assignee, the franchisee is obligated to transfer the assets. The franchisee must provide good and clear title to the assets, transfer assignable licenses and permits, and assign the lease or sublease for the site. The purchase price will be paid in cash, a cash equivalent, or marketable securities, and the closing must occur within 90 days of the franchisee receiving notice of the purchase option.
This clause protects Hyper Kidz by allowing them to maintain control over the location and assets of a former franchise. For a potential franchisee, this means that upon termination or expiration of the agreement, Hyper Kidz has significant control over the future of the business location and assets, potentially limiting the franchisee's ability to continue a similar business at the same site under a different brand.