Under the Hyper Kidz agreement, do the representations and warranties survive termination or expiration of the agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
umber of shares of that class of securities issued and outstanding.
- 19.4.3 The restrictions of Section 19.4.1 shall not be construed to prohibit you, any Principal of yours or any member of your respective immediate families from having a direct or indirect ownership interest in any Hyper Kidz Business Franchise Agreement for the operation of any Hyper Kidz Business, or any entity owning, controlling or operating a Hyper Kidz Business or from providing services to a Hyper Kidz Business.
19.5 Continuing Obligations
All obligations of ours and yours which expressly or by their nature survive or are intended to survive the expiration or termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire.
19.6 Our Right to Purchase Assets of the Hyper Kidz Business
Upon termination of this Agreement by us in accordance with its terms and conditions or upon expiration of this Agreement without the grant of a Renewal Franchise, we shall have the option to purchase from you all or a portion of the assets used in the Hyper Kidz Business. We may exercise this option by giving written notice thereof within sixty (60) days from the date of such expiration or termination.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, the obligations outlined in the franchise agreement that, by their nature, are meant to survive the termination or expiration of the agreement will remain in effect.
Specifically, if Hyper Kidz terminates the agreement or it expires without renewal, Hyper Kidz has the option to purchase the assets of the franchisee's business. If Hyper Kidz exercises this option, they are entitled to customary warranties and representations from the seller (the franchisee). These include assurances about the ownership, condition, and title to assets, any liens or encumbrances, the validity of contracts, and any contingent liabilities.
This means that even after the franchise agreement ends, the franchisee may still be responsible for certain obligations and liable for any misrepresentations regarding the business's assets if Hyper Kidz chooses to purchase them. This is a fairly standard practice in franchising, as it protects the franchisor from inheriting unforeseen liabilities or disputes related to the transferred assets.