What right does Hyper Kidz have regarding the review of a Hyper Kidz franchisee's lease, sublease, or purchase agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
You must select a site that you propose to use for your Franchised Business and you must submit to us all information we require to evaluate the site you propose. You may not obtain the site (by lease, sublease or purchase agreement) until the site has been approved by us. We have the right to review any lease, sublease or purchase agreement for the approved site before you sign it. At our request, you and your landlord must sign our form of Collateral Assignment of Lease, attached to the Franchise Agreement as Attachment 6.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, franchisees must first select a site for their Franchised Business and submit all required information for Hyper Kidz to evaluate it. The franchisee cannot secure the site through a lease, sublease, or purchase agreement until Hyper Kidz approves the location. Hyper Kidz retains the right to review any lease, sublease, or purchase agreement for the approved site before the franchisee signs it.
Furthermore, Hyper Kidz can require that both the franchisee and their landlord sign Hyper Kidz's standard Collateral Assignment of Lease form, which is included as Attachment 6 to the Franchise Agreement. This gives Hyper Kidz significant control over the site selection and lease terms for each franchise location.
This level of oversight is common in franchising, as the location and lease terms can significantly impact the success of the business and the brand's image. By maintaining approval rights, Hyper Kidz can ensure that franchisees secure suitable locations and avoid unfavorable lease conditions. This protects both the franchisee's investment and the overall integrity of the Hyper Kidz brand.