Under what circumstances can Hyper Kidz terminate the agreement without an opportunity to cure?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ch to you and you do not (a) correct such breach within fifteen (15) days after delivery to you of such notice of breach; or (b) if such breach cannot reasonably be corrected within thirty (30) days after delivery of notice of breach, undertake within ten (10) days after delivery of such notice of breach and continue until completion efforts to cure such breach and furnish proof acceptable to us upon our request of such efforts and the date full compliance will be achieved.
18.2 Termination Upon Notice – No Opportunity to Cure
Notwithstanding Section 18.1, we may terminate this Agreement upon delivery of notice of termination to you without opportunity to cure if you commit any of the following breaches:
- 18.2.1 You fail to (i) locate a suitable Site; (ii) obtain lawful possession of the Site; (iii) develop the Hyper Kidz Business; (iv) satisfactorily complete our initial training program; or (v) commence operation of business, within the times provided in this Agreement;
- 18.2.2 You or any of your Principals abandon, surrender or transfer control of the operation of the Hyper Kidz Business without our prior written approval. For purposes hereof, "abandon" shall be the closure of your Hyper Kidz Business for five (5) consecutive days without our prior written consent;
- 18.2.3 You or any of your Principals has made any material misrepresentation or omission in the application for the Franchise;
- 18.2.4 You or any of your Principals (i) are convicted by a trial court of or plead guilty or no contest to a felony or to another crime or offense, including a crime against a child, that may adversely affect the reputation of you, the Hyper Kidz Business or the goodwill associated with the Marks; or (ii) engage in any conduct which is injurious or prejudicial to the goodwill associated with the Marks or the System or which adversely affects the reputation of us or any Hyper Kidz Business;
- 18.2.5 You or your Principals make any unauthorized use or disclosure of or duplicate any copy of any Confidential Information, make any unauthorized use of the Marks or Copyrighted Works, or use, duplicate or disclose any portion of the Operations Manual, or challenge or seek to challenge the validity of the Marks or Copyrighted Works;
- 18.2.6 You lose the right to possession of the Site and do not relocate the Hyper Kidz Business to another site in accordance with this Agreement;
- 18.2.7 You or any of your partners, if you are a partnership, or any of your officers, directors, shareholders, or members, if you are a corporation or limited liability company, shall become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by you or such a petition is filed against and not opposed by you; if you are adjudicated a bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver or other custodian for your business or assets is filed and consented to by you; if a receiver or other custodian (permanent or temporary) of your assets or property, or any part thereof, is appointed by any court of competent jurisdiction; if proceedings
for a composition with creditors under any state or federal law should be instituted by or against you; if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless a supersedeas bond is filed); if you are dissolved; if execution is levied against your business or property; if suit to foreclose any lien or mortgage against the premises or equipment is instituted against you and not dismissed within thirty (30) days; or if the real or personal property of the Hyper Kidz Business shall be sold after levy thereupon by any sheriff, marshal, or constable;
- 18.2.8 You, your Principals, or members of their immediate families violate the restrictions of Article 9 of this Agreement (Exclusive Relationship) or of any Confidentiality and Non-Competition Agreement;
- 18.2.9 You fail to report accurately the Gross Sales of the Hyper Kidz Business or fail to make payments of any amounts due us or our Affiliates for Royalty Fees, Brand Development Fees, purchases from us or our Affiliates or any other amounts due to us or our Affiliates, and do not correct such failure within ten (10) days after written notice thereof;
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, Hyper Kidz can terminate the franchise agreement without giving the franchisee an opportunity to fix the problem under several specific circumstances. These include failing to secure a suitable site, obtain lawful possession of the site, develop the Hyper Kidz business, complete the initial training program, or commence business operations within the timeframes outlined in the agreement. Abandoning or transferring control of the Hyper Kidz business without prior written approval also constitutes grounds for immediate termination. Abandonment is defined as closing the business for five consecutive days without the franchisor's consent. Furthermore, any material misrepresentation or omission made during the franchise application process can lead to termination without a chance to cure.
Hyper Kidz can also terminate the agreement immediately if the franchisee or their principals are convicted of a felony or any crime, including one against a child, that could harm the reputation of the franchise. Engaging in conduct that is harmful or prejudicial to the goodwill associated with the Hyper Kidz brand or system also warrants immediate termination. Unauthorized use or disclosure of confidential information, trademarks, or copyrighted materials, as well as challenging the validity of these intellectual properties, are additional reasons for immediate termination.
Further, the agreement can be terminated without opportunity to cure if the franchisee loses possession of the site and fails to relocate the Hyper Kidz business as per the agreement. Knowingly maintaining false books or records, submitting false reports, or defaulting on the lease for the site without curing the default within the lease's cure period are also grounds for immediate termination. Failing to maintain required insurance or reimburse Hyper Kidz for insurance purchased on the franchisee's behalf within fifteen days of written demand can also lead to termination without a cure period. Finally, Hyper Kidz can terminate the agreement immediately if a threat to public health or safety arises from the business's operation, if the franchisee refuses inspection access, or if the franchisee interferes with Hyper Kidz's ability to franchise or manage relationships with other franchisees or suppliers.
These termination conditions are fairly standard in franchising, designed to protect the brand and maintain consistent standards across all franchise locations. Prospective Hyper Kidz franchisees should carefully review these conditions to understand their obligations and the potential consequences of non-compliance. Paying close attention to deadlines for site selection, training completion, and insurance requirements is crucial. Franchisees should also ensure they maintain accurate records, comply with all operational standards, and avoid any actions that could harm the brand's reputation or infringe on its intellectual property rights.