After the termination or expiration of the Hyper Kidz franchise agreement, is the franchisee allowed to retain a copy of the membership and customer database?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
You shall establish and maintain, at your own expense, a bookkeeping, accounting, record keeping and records retention system conforming to the requirements prescribed by us from time to time, which includes you obtaining and maintaining a point of sale or computer system ("computer system") that we specify or approve. Each transaction of the Hyper Kidz Business shall be processed on the computer system in the manner we prescribe. We shall have at all times the right to access the computer system and all data processed on the computer system with respect to the Hyper Kidz Business, including, without limitation, your membership and customer database. You shall take such action as may be necessary to provide such access to us, at your expense. You understand and agree that your membership and customer database will, at all times, remain our property and that you shall be an authorized user of such database during the term of this Agreement. In no event shall you retain a copy of such database after the termination or expiration of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, franchisees are expressly prohibited from retaining a copy of the membership and customer database after the termination or expiration of the franchise agreement. Hyper Kidz requires franchisees to establish and maintain a point-of-sale or computer system that the franchisor specifies or approves. All transactions of the Hyper Kidz business must be processed on this system.
Hyper Kidz retains the right to access the computer system and all data processed within it, including the membership and customer database. Franchisees must take the necessary actions to provide this access to Hyper Kidz at their own expense. The FDD clearly states that the membership and customer database remains the property of Hyper Kidz at all times, with the franchisee only authorized to use it during the term of the agreement.
This provision ensures that Hyper Kidz maintains control over customer data and prevents franchisees from using this information to compete with the franchise after the agreement ends. This is a fairly standard practice in franchising, as the customer database is often considered a valuable asset of the franchise system. Prospective franchisees should understand that building a customer base does not translate to ownership of that data after the franchise term.