During the term of the franchise, where are Hyper Kidz multi-unit developers prohibited from operating a Competitive Business?

According to Hyper Kidz's 2024 Franchise Disclosure Document, multi-unit developers are restricted from operating a Competitive Business anywhere during the term of the franchise agreement. This is detailed in Item 17, which outlines the terms for renewal, termination, transfer, and dispute resolution. Specifically, it mentions non-competition covenants during the franchise term.

This restriction means that while a franchisee is actively developing and operating Hyper Kidz locations under a multi-unit development agreement, they (and their immediate family members) cannot be involved in any business that offers products or services similar to those of Hyper Kidz. For corporate entities, their business activities must be solely focused on the development and operation of Hyper Kidz locations.

The definition of a Competitive Business includes any business offering products or services substantially similar to those offered by Hyper Kidz. This broad restriction is common in franchising to protect the brand and prevent franchisees from using the franchisor's knowledge and resources to benefit a competing business. A prospective franchisee should carefully consider this restriction and ensure they are not currently involved in any conflicting business ventures.

This non-compete clause is in effect for the duration of the franchise agreement. After the agreement terminates or expires, a different set of restrictions applies, limiting involvement in a Competitive Business for two years within 15 miles of any Hyper Kidz location. Therefore, the restrictions during the term are much broader, encompassing 'anywhere,' compared to the geographically limited restrictions post-termination.