Can the rights and remedies in the Hyper Kidz Franchise Agreement be exercised more than once?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ave under this Agreement. All monies from the operation of the Hyper Kidz Business during such period of operation by us shall be kept in a separate account, and the expenses of the Hyper Kidz Business, including reasonable compensation and expenses for our representative, shall be charged to said account. If, as herein provided, we temporarily operate the Hyper Kidz Business franchised herein for you, you agree to indemnify and hold harmless us and any representative of ours who may act hereunder, from any and all acts which we may perform, as regards the interests of you or third parties.
22.9 Step-In Rights
If we determine in our sole judgment that the operation of your Hyper Kidz Business is in jeopardy, or if a default occurs, then in order to prevent an interruption of the Hyper Kidz Business which would cause harm to the System and thereby lessen its value, you authorize us to operate your Hyper Kidz Business for as long as we deem necessary and practical, and without waiver of any other rights or remedies which we may have under this Agreement. In our sole judgment, we may deem you incapable of operating the Hyper Kidz Business if, without limitation, you are absent or incapacitated by reason of illness or death; you have failed to pay when due or have failed to remove any and all liens or encumbrances of every kind placed upon or against your Hyper Kidz Business; or we determine that operational problems require that we operate your Hyper Kidz Business for a period of time that we determine, in our sole discretion, to be necessary to maintain the operation of the Hyper Kidz Business as a going concern.
We shall keep in a separate account all monies generated by the operation of your Hyper Kidz Business, less the expenses of the Hyper Kidz Business, including reasonable compensation and expenses for our representatives. If we temporarily operate your Hyper Kidz Business on your behalf, you agree to pay to us the then-current fee for the management and maintenance of the Business in your absence.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, Hyper Kidz retains certain rights that can be exercised multiple times. Specifically, in situations where the operation of a Hyper Kidz franchise is in jeopardy or a default occurs, Hyper Kidz has the right to step in and operate the franchise location. This can occur as long as Hyper Kidz deems it necessary and practical, without waiving any other rights or remedies they possess under the Franchise Agreement.
Hyper Kidz may determine that a franchisee is incapable of operating the Hyper Kidz Business if the franchisee is absent, incapacitated due to illness or death, has failed to pay amounts when due, or has failed to remove any liens or encumbrances on the business. Hyper Kidz also has the right to step in if they determine that operational problems necessitate their intervention to maintain the business as a going concern.
When Hyper Kidz exercises these step-in rights, they will manage the business's finances in a separate account, covering expenses and compensating their representatives. The franchisee is responsible for paying the then-current fee for the management and maintenance of the business during Hyper Kidz's operation. Additionally, the franchisee agrees to indemnify Hyper Kidz and its representatives for actions taken during this temporary operation and to cover all reasonable attorney's fees and costs incurred by Hyper Kidz in exercising these rights.
The FDD explicitly states that the ability for Hyper Kidz to step in and operate the franchise does not prevent them from exercising any other rights they have under the agreement, including termination. This indicates that Hyper Kidz can utilize its step-in rights multiple times and also pursue other remedies concurrently or subsequently, depending on the circumstances.