Under what circumstances can Hyper Kidz exercise its step-in rights to operate my Hyper Kidz Business?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
If we determine in our sole judgment that the operation of your Hyper Kidz Business is in jeopardy, or if a default occurs, then in order to prevent an interruption of the Hyper Kidz Business which would cause harm to the System and thereby lessen its value, you authorize us to operate your Hyper Kidz Business for as long as we deem necessary and practical, and without waiver of any other rights or remedies which we may have under this Agreement. In our sole judgment, we may deem you incapable of operating the Hyper Kidz Business if, without limitation, you are absent or incapacitated by reason of illness or death; you have failed to pay when due or have failed to remove any and all liens or encumbrances of every kind placed upon or against your Hyper Kidz Business; or we determine that operational problems require that we operate your Hyper Kidz Business for a period of time that we determine, in our sole discretion, to be necessary to maintain the operation of the Hyper Kidz Business as a going concern.
We shall keep in a separate account all monies generated by the operation of your Hyper Kidz Business, less the expenses of the Hyper Kidz Business, including reasonable compensation and expenses for our representatives. If we temporarily operate your Hyper Kidz Business on your behalf, you agree to pay to us the then-current fee for the management and maintenance of the Business in your absence. In the event of our exercise of the Step-In Rights**,** you agree to hold harmless us and our representatives for all
actions occurring during the course of such temporary operation. You agree to pay all of our reasonable attorneys' fees and costs incurred as a consequence of our exercise of the Step-In Rights. Nothing contained herein shall prevent us from exercising any other right which we may have under this Agreement, including, without limitation, termination.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz may exercise step-in rights to operate your Hyper Kidz Business if they determine, in their sole judgment, that the operation of your business is in jeopardy or if you are in default of the franchise agreement. This is to prevent any interruption of the Hyper Kidz Business that could harm the system and lessen its value.
Specifically, Hyper Kidz may deem you incapable of operating the business if you are absent or incapacitated due to illness or death, if you fail to make payments when due, or if you fail to remove any liens or encumbrances against your Hyper Kidz Business. Hyper Kidz can also step in if they determine that operational problems necessitate their intervention to maintain the business as a going concern.
If Hyper Kidz exercises these step-in rights, they will keep all monies generated by the operation of your Hyper Kidz Business in a separate account, deducting the expenses of the business, including reasonable compensation and expenses for their representatives. You will be responsible for paying the then-current fee for the management and maintenance of the business during their operation. Additionally, you agree to hold Hyper Kidz harmless for all actions occurring during this temporary operation and to cover all reasonable attorneys' fees and costs they incur as a result of exercising their step-in rights. It is important to note that exercising step-in rights does not prevent Hyper Kidz from exercising any other rights they have under the agreement, including termination.