Does Hyper Kidz have a right of first refusal to acquire a multi-unit developer's business?

According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz retains a right of first refusal to acquire a multi-unit developer’s business. This means that if a multi-unit developer receives an offer to purchase their Hyper Kidz business, they must first present that offer to Hyper Kidz, giving Hyper Kidz the option to match the offer and purchase the business themselves. This provision is detailed in Section 11 of the Multi-Unit Development Agreement.

For a prospective Hyper Kidz multi-unit developer, this right of first refusal means that they cannot simply sell their business to anyone they choose. They must first offer the business to Hyper Kidz on the same terms as any third-party offer. This could potentially delay or complicate the sale process, as the developer must wait for Hyper Kidz to decide whether to exercise their right of first refusal.

However, this provision also provides a degree of security for the multi-unit developer. If Hyper Kidz exercises its right of first refusal, the developer is assured of selling their business at a fair market price. Additionally, it ensures that Hyper Kidz has a continued interest in the success of the locations, even if the original developer exits the system. This is a fairly common practice in franchising, allowing franchisors to maintain control over their brand and network.