What state's laws govern the Hyper Kidz Multi-Unit Development Agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| (l) Franchisor approval of transfer by multi-unit developer | Section 11 | We have the right to approve all transfers, our consent not to be unreasonably withheld | |
| (m) Conditions for franchisor approval of transfer | Section 11 | Conditions for transfer include not being in default, at least 25% of all Hyper Kidz Businesses required to be developed are open or under construction, all debts are paid, the buyer meets our current criteria for new multi-unit developers, you sign a general release, payment of transfer fee, buyer personally guarantees all obligations | |
| (n) Franchisor’s right of first refusal to acquire multi-unit developer’s business | Section 11 | We have the right to match the offer to purchase your business | |
| (o) Franchisor’s option to | Not applicable | Not applicable | |
| purchase multi-unit | |||
| developer’s business | |||
| (p) Death or disability of | Section 11 | Interest must be transferred to an approved party | |
| multi-unit developer | within 12 months | ||
| (q) Non-competition covenants during the term of the franchise | Section 12 | Can’t divert business or operate a Competitive Business anywhere | |
| (r) Non-competition covenants after the franchise is terminated or expires | Section 12 | No participation in a Competitive Business for two years and within 15 miles of any Hyper Kidz Business in the System | |
| (s) Modification of the agreement | Section 18 | The Multi-Unit Development Agreement may not be modified unless mutually agreed to in writing. You must comply with Manual as amended | |
| (t) Integration/merger clause | Section 18 | Only the terms of the Multi-Unit Development Agreement and other related written agreements are binding (subject to applicable federal and/or state law). Any representations or promises outside of the Disclosure Document and Multi- Unit Development Agreement may not be enforceable | |
| (u) Dispute resolution by | Section 19 | Arbitration in Howard County, Maryland (subject | |
| arbitration or mediation | to state law) | ||
| (v) Choice of forum | Section |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 41–49)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the Multi-Unit Development Agreement is governed by Maryland law. However, this is subject to state law. This means that while the agreement itself specifies Maryland law, any conflicting state laws in the franchisee's location could take precedence.
This choice of law has significant implications for Hyper Kidz franchisees. It means that the agreement will be interpreted and enforced primarily under Maryland's legal framework, which may be different from the laws in the state where the franchisee's business is located. Franchisees need to be aware of this and understand how Maryland law applies to their obligations and rights under the agreement.
Furthermore, any disputes related to the Multi-Unit Development Agreement will be subject to arbitration in Howard County, Maryland, also subject to state law. This forum selection clause means that franchisees may need to travel to Maryland to resolve legal issues, potentially increasing costs and logistical challenges. Prospective franchisees should consult with a legal professional to fully understand the implications of these provisions and how they might affect their specific circumstances.