Are there any exceptions to the Hyper Kidz transfer fee, and if so, what are the conditions?
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 |
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the standard transfer fee is $15,000, which must be submitted with the transfer application. However, there is a specific exception to this fee under certain conditions.
Hyper Kidz waives the $15,000 transfer fee for individual or partnership franchisees who transfer their franchise rights one time only. This exception applies exclusively when the transfer is made to a corporate entity that is controlled by the same interest holders as the original franchisee. This means that the ownership and control of the business must remain essentially the same after the transfer, even though the legal structure changes to a corporation.
This exception can be beneficial for franchisees who initially set up their Hyper Kidz business as an individual or partnership but later decide to incorporate for legal or tax reasons. By structuring the transfer in this way, they can avoid paying the $15,000 transfer fee, resulting in a significant cost savings. However, it's important to note that this waiver only applies once, so any subsequent transfers would likely be subject to the standard fee. Franchisees should carefully document and structure the transfer to meet Hyper Kidz's requirements and ensure they qualify for this exception.