Under what condition will Hyper Kidz not establish or franchise anyone other than the multi-unit developer to establish a Hyper Kidz Business in the Development Area?

According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz grants the multi-unit developer certain development rights within a specific area. During the term of the Multi-Unit Development Agreement, Hyper Kidz will not establish or franchise anyone else to establish a Hyper Kidz Business in the Development Area, provided the multi-unit developer is in full compliance with all the terms and conditions of the agreement. This includes meeting the development obligations and fulfilling all obligations under the franchise agreements executed pursuant to the Multi-Unit Development Agreement.

This provision offers a degree of territorial protection to the multi-unit developer, ensuring that Hyper Kidz will not directly compete or allow other franchisees to compete within the designated Development Area as long as the developer remains in compliance with the agreement. This encourages the developer to invest and grow the Hyper Kidz brand within their territory without the immediate threat of internal competition.

However, this protection is not absolute. The agreement specifies that upon termination or expiration of the Multi-Unit Development Agreement, Hyper Kidz and its affiliates reserve the right to develop, operate, and grant franchises to others within the Development Area. Additionally, the right is subject to the territorial rights granted with respect to businesses operated under existing Franchise Agreements and the right of first refusal described in Section 6. Therefore, the multi-unit developer's exclusive rights are tied to the active term and good standing of their agreement.