Are there any exceptions to the non-compete clauses in the Hyper Kidz agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
n default under this Agreement.
3.3 You may enter into the initial Franchise Agreement or any subsequent Franchise Agreement as required under this Agreement using a newly formed entity, such as limited liability company, corporation or partnership, for the sole purpose of entering into a Franchise Agreement and operating the Hyper Kidz Business pursuant thereto, provided that you shall also personally sign such Franchise Agreement as a principal. In no event shall you relinquish control over each entity operating each Hyper Kidz Business.
SECTION 4: DEVELOPMENT RIGHTS AND OBLIGATIONS
- 4.1 Subject to the provisions of this Agreement, we grant to you the Development Rights, as described in Section 1.1.
- 4.2 Provided you are in full compliance with all the terms and conditions of this Agreement, including without limitation your development obligations described in Section 3.2, and you are in full compliance with all of your obligations under all franchise agreements executed pursuant to this Agreement, then during the term of this Agreement neither we nor any of our affiliates will develop or operate or grant franchisesfor the development or operation of Hyper Kidz Businesses within the Development Area, except the franchisesthat are granted to you pursuant to this Agreement and except as otherwise expressly provided in this Agreement.
- 4.3 Upon the termination or expiration of this Agreement, we and our affiliates shall have the right to develop and operate, and to grant to others development rights and franchises to develop and operate, Hyper Kidz Businesses within the Development Area subject only to the territorial rights granted to you with respect to Businesses operated by you pursuant to the Franchise Agreements and the right of first refusal described in Section 6 below.
Source: Item 23 — RECEIPTS (FDD pages 52–205)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, there are a few exceptions to the non-compete clauses within the development agreement. Hyper Kidz retains the right to construct and operate other Hyper Kidz businesses and to use the System and the Marks at any location outside the Development Area, and to license others to do so. Hyper Kidz also retains the right to develop, use and franchise the rights to any trade names, trademarks, service marks, trade symbols, emblems, signs, slogans, insignia, or copyrights not designated as Marks for use with different franchise systems for the sale of the different products or services not in connection with the System at any location.
Hyper Kidz and its affiliates retain all rights with respect to Hyper Kidz Businesses, the Marks and the sale of any goods and services, anywhere in the world. This includes the right to offer and sell and to grant others the right to offer and sell the products and services offered at Hyper Kidz Businesses, both within and outside the Development Area, under trade and service marks other than the Marks and under any terms and conditions Hyper Kidz deems appropriate. They also retain the right to operate and to grant others the right to operate Hyper Kidz Businesses located outside the Development Area under any terms and conditions Hyper Kidz deems appropriate and regardless of proximity to your Hyper Kidz Businesses.
Hyper Kidz can also acquire and operate a business operating one or more similar businesses located or operating in your Development Area, but if one of these businesses is located within your Development Area, it will not operate using the Proprietary Marks. These exceptions mean that while franchisees are granted certain development rights within their designated area, Hyper Kidz maintains considerable freedom to operate and expand its brand through other channels and in different locations, even if those locations are near a franchisee's territory. Prospective franchisees should consider these exceptions carefully to understand the full scope of their protected rights and the potential for competition from the franchisor itself.