What rights does Hyper Kidz retain regarding businesses outside the Multi-Unit Development Agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Except as expressly limited by the Multi-Unit Development Agreement, we and our affiliates retain all rights with respect to Hyper Kidz Businesses, the Marks, and any products and services anywhere in the world including the right: (a) to offer and sell and to grant others the right to offer and sell the products and services offered at Hyper Kidz Businesses, both within and outside the Development Area, under trade and service marks other than the Marks and under any terms and conditions we deem appropriate; (b) to operate and to grant others the right to operate Hyper Kidz Businesses located outside the Development Area under any terms and conditions we deem appropriate and regardless of proximity to your Hyper Kidz Businesses; and (c) to acquire and operate a business operating one or more similar businesses located or
Source: Item 12 — TERRITORY (FDD pages 33–36)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz and its affiliates retain significant rights regarding Hyper Kidz businesses, marks, products, and services worldwide, except as expressly limited by the Multi-Unit Development Agreement or Franchise Agreement. Specifically, Hyper Kidz has the right to offer and sell Hyper Kidz products and services, and to allow others to do the same, both within and outside a franchisee's Development Area, under different trade and service marks and under any terms and conditions Hyper Kidz deems appropriate. This means that Hyper Kidz is not restricted from operating or franchising similar businesses under different branding, even in areas close to a franchisee's location.
Hyper Kidz also retains the right to operate, and to grant others the right to operate, Hyper Kidz businesses outside the Development Area under any terms and conditions they deem appropriate, regardless of how close these businesses are to a franchisee's Hyper Kidz location. Furthermore, Hyper Kidz can acquire and operate businesses with similar indoor recreation facilities, even within a franchisee's Development Area. However, if Hyper Kidz acquires such a business within the Development Area, it cannot operate it using Hyper Kidz's proprietary marks.
For a prospective franchisee, these retained rights highlight the importance of understanding the scope and limitations of the territorial protection offered by Hyper Kidz. While a franchisee may have certain exclusive rights within their Development Area, Hyper Kidz maintains considerable freedom to operate or franchise similar businesses outside of that area, potentially creating competition. It is important to note that after the Multi-Unit Development Agreement expires once the last Hyper Kidz Business under the minimum performance schedule has opened, Hyper Kidz and its affiliates have the right to operate and grant development rights and franchises to develop and operate Hyper Kidz Businesses within the Development Area. These rights are subject to the territorial rights under the Franchise Agreements and the franchisee's right of first refusal to develop additional Hyper Kidz Businesses.