Is the territory for a Hyper Kidz franchise exclusive?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
This Agreement grants Franchisee the right to operate the Franchised Business at a single location and from within the Territory. Subject to Section 3.2 below, Franchisor agrees that during the Term of this Agreement, Franchisor will not operate, and will not authorize any other franchisees to operate, a Hyper Kidz outlet in the Territory using the same Marks as licensed to Franchisee in this Agreement so long as Franchisee is not in default under this Agreement or this Agreement has not been terminated. Except as otherwise specified in this Agreement, Franchisor reserves the right to open, operate or franchise Hyper Kidz franchises bordering and adjacent to the Territory. Except as set forth in this Agreement, Franchisee is prohibited from serving and soliciting customers outside of the Territory and from alternative methods of distribution as more fully specified herein. You expressly acknowledge that this Franchise is nonexclusive, but that this Agreement does grant you a protected area or territory for your Hyper Kidz Business referred to herein as your "Designated Territory". Your Designated Territory is described in Attachment 3 hereof.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the franchise agreement does grant a protected territory, but it is explicitly non-exclusive. The agreement grants the franchisee the right to operate a Hyper Kidz business at a single location within a defined territory. During the term of the agreement, Hyper Kidz will not operate or authorize other franchisees to operate a Hyper Kidz outlet within that territory using the same marks, provided the franchisee remains in compliance with the agreement.
However, Hyper Kidz retains the right to open, operate, or franchise Hyper Kidz locations bordering or adjacent to the franchisee's territory. The franchisee is restricted from actively soliciting customers outside their designated territory and from using alternative distribution methods, except for party bookings made through Hyper Kidz's website.
Hyper Kidz also retains rights to sell products and services through other channels of distribution, even within the franchisee's designated territory, as long as they use different trademarks. They can also operate Hyper Kidz outlets outside the designated territory, regardless of proximity to the franchisee's location. Additionally, Hyper Kidz has the right to acquire and operate a child development business within the franchisee's territory, as long as it does not operate under the Hyper Kidz brand. If a prospective franchisee is interested in establishing a Hyper Kidz business in an area contiguous to the franchisee's territory, Hyper Kidz may offer the current franchisee a right of first refusal to purchase and operate the additional location.