What must a Hyper Kidz transferee demonstrate to operate the business?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
liates and our respective shareholders, officers, directors, employees and agents; and
- (e) you have complied with the provisions of Section 16.7 below relating to our right of first refusal.
- 16.3.2 In addition to the above, if the transfer is of this Agreement, a Principal's interest in you, or is one of a series of transfers which, in the aggregate, constitute the transfer of this Agreement, all of the following conditions must be met prior to or concurrently with the effective date of the transfer:
- (a) the transferee must have sufficient business experience, aptitude and financial resources to operate the Hyper Kidz Business and perform the obligations of the transferor under this Agreement, and neither the transferee nor its Principals may be engaged in or intend to engage in a Competitive Business;
- (b) you and the transferee (if it is then a franchisee of ours) must pay such Royalty Fees, Brand Development Fees, amounts owed for purchases by you (or such transferee) from us and our Affiliates, and all other amounts owed to us or our Affiliates which are then due and unpaid;
- (c) the transferee and its personnel who will have access to the Confidential Information must have signed the Confidentiality and Non-Competition Agreement and have completed our training program to our satisfaction;
- (d) the transferee and its Principals, at our option, must agree in a manner satisfactory to us to be bound by all terms and conditions of this Agreement for the remainder of its term or execute our then-current form of franchise agreement and such ancillary documents, including guarantees, as are then customarily used by us in the grant of franchises for Hyper Kidz Businesses, modified as necessary to provide for the same Royalty Fees required hereunder and a term equal to the remaining term of this Agreement;
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, a transferee must meet several conditions to be approved to operate the business. The transferee must demonstrate sufficient business experience, aptitude, and financial resources to manage the Hyper Kidz Business and fulfill the transferor's obligations under the existing agreement. Neither the transferee nor its Principals can be involved in, or plan to be involved in, a Competitive Business.
The transferee and its personnel who will access confidential information must sign a Confidentiality and Non-Competition Agreement and complete Hyper Kidz's training program to their satisfaction. Hyper Kidz, at its option, can require the transferee and its Principals to agree to all terms and conditions of the existing agreement for the remainder of its term or execute Hyper Kidz's current franchise agreement, including any necessary guarantees. The transferee must also furnish information and references that Hyper Kidz requires of potential franchisees and attend a personal interview at Hyper Kidz's office at their own expense.
Additionally, the transferee, at its own expense, must upgrade the Hyper Kidz Business to meet the current standards and specifications for new franchises. The lessor or sublessor of the Hyper Kidz Business must provide written consent to the assignment of the lease to the proposed transferee. If the transferee is acquiring a portion of the interest in the legal entity, they must execute Hyper Kidz's form of guaranty. The transfer must also comply with all applicable laws.
These conditions ensure that the transferee is capable of maintaining the standards and reputation of the Hyper Kidz brand, protecting confidential information, and adhering to the franchise agreement's terms. Meeting these requirements is essential for the transfer to be approved and for the continued successful operation of the Hyper Kidz Business.