When transferring a Hyper Kidz franchise, what options does the franchisor have regarding the franchise agreement the transferee must agree to?

According to the 2024 Hyper Kidz Franchise Disclosure Document, when transferring a franchise, Hyper Kidz has options regarding the agreement the transferee must adhere to. Specifically, Hyper Kidz may require the transferee and its Principals to agree to be bound by the existing franchise agreement's terms and conditions for the remainder of its term. Alternatively, Hyper Kidz can require the transferee to execute the then-current form of the franchise agreement and related documents, including guarantees, that Hyper Kidz typically uses when granting new franchises.

If Hyper Kidz opts for the latter, the new agreement will be modified to maintain the same Royalty Fees as the original agreement and will have a term equal to the remaining term of the original agreement. This ensures that the financial obligations and the duration of the franchise remain consistent with the initial agreement, while allowing Hyper Kidz to update other terms and conditions as per their current franchise standards.

This provision provides Hyper Kidz with flexibility in ensuring that the franchise agreement aligns with their current standards and practices while protecting their interests during a transfer. For a prospective franchisee, this means that if they plan to transfer their franchise in the future, the transferee may be subject to either the original agreement or a more current version, depending on Hyper Kidz's decision at the time of transfer. It is important to note that the transferee must also meet other conditions, such as demonstrating sufficient business experience and financial resources, completing the training program, and signing a confidentiality and non-competition agreement.