Under what conditions can Hyper Kidz terminate the Multi-Unit Development Agreement with cause?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
es have been developed, we will negotiate in good faith another Multi-Unit Development Agreement |
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| (c) Requirements for multi- | None | Not applicable | |
| unit developer to renew | |||
| or extend | |||
| (d) Termination by multi- | None | You may seek to terminate on any grounds | |
| unit developer | available to you at law | ||
| (e) Termination by | None | Not applicable | |
| franchisor without | |||
| cause | |||
| (f) Termination by | Section 9 | We can terminate if you commit any one of | |
| franchisor with cause | several listed violations | ||
| (g) “Cause” defined – curable defaults | Section 9 | If you use the Marks or System without our consent; participating in a Competitive Business; failure to pay money to us when due; you begin developing a Hyper Kidz Business before all of your pre-development obligations are met; failure to obtain our consent when required; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 41–49)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz can terminate the Multi-Unit Development Agreement with cause if the multi-unit developer commits certain violations, as detailed in Section 9 of the agreement. These violations are categorized into curable and non-curable defaults.
Curable defaults include actions such as using Hyper Kidz's trademarks or systems without consent, engaging in a competitive business, failing to make timely payments to Hyper Kidz, starting development before meeting pre-development obligations, failing to obtain required consent, or opening a Hyper Kidz business before signing a franchise agreement for that specific location. These defaults are typically violations that the developer can correct to avoid termination.
Non-curable defaults, which are more severe and cannot be easily rectified, include failing to meet the minimum performance schedule, not complying with applicable laws, ceasing operations of all Hyper Kidz businesses, engaging in unauthorized transfers of the agreement, making material misrepresentations to Hyper Kidz, a conviction of an indictable offense by the developer or its principals, bankruptcy or insolvency, or termination of a Franchise Agreement according to its terms (cross-default provision). The presence of any of these non-curable defaults can lead to immediate termination of the Multi-Unit Development Agreement by Hyper Kidz.
These termination conditions are standard in franchise agreements to protect the franchisor's brand and ensure compliance with the agreed-upon terms. Prospective multi-unit developers should carefully review Section 9 of the Multi-Unit Development Agreement to fully understand their obligations and the potential consequences of failing to meet them.