How is the Successor Agreement Fee determined for a Hyper Kidz franchise?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
late fee. |
| Fees (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit Fee | Cost of audit (estimated to be between $1,000 and $5,000) | When billed | Payable only if we find, after an audit, that you have understated any amount you owe to us or Gross Sales by 2% or more. You must also pay the understated amount plus interest. |
| Insufficient Funds Fee | $125 per occurrence | On demand, if incurred | Payable if there are insufficient funds in your account to pay fees due to us. If you incur three insufficient funds fees in any 12-month period, we have the right to terminate your Franchise Agreement. |
| Transfer Fee | $15,000 | Submitted with transfer application | No fee charged to an individual or partnership franchisee that transfers its rights, one time only, to a corporate entity controlled by the same interest holders. |
| Successor Agreement Fee | 50% of our then current initial franchise fee | On signing of Successor Agreement | |
| Liquidated Damages | The amount equal to the average monthly Royalty Fees you paid or owed to us during the 12 months of operation preceding the effective date of termination multiplied by (a) 24 (being the number of months in two full years), or (b) the number of months remaining in the Agreement had it not been terminated, whichever is lower. | 1 |
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the Successor Agreement Fee is 50% of the then-current initial franchise fee. This fee is due upon signing the Successor Agreement.
In practical terms, this means that if a franchisee wants to renew their franchise agreement for another term, they will need to pay this Successor Agreement Fee. The amount will depend on what the initial franchise fee is at the time of renewal, not what it was when the franchisee originally signed the agreement. For example, if the initial franchise fee has increased from $50,000 to $60,000 by the time the franchisee seeks a successor agreement, the fee will be 50% of $60,000, or $30,000.
Franchisees should be aware that this fee can represent a significant cost when renewing their franchise agreement. It is important to factor this potential expense into long-term financial planning. Franchisees should also monitor any changes to the initial franchise fee over time, as this will directly impact the cost of the Successor Agreement Fee.