Under what conditions will Hyper Kidz not unreasonably withhold approval of a one-time transfer of the Franchise and Hyper Kidz Business to a corporation or comparable legal entity?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
If you are in full compliance with this Agreement, then we shall not unreasonably withhold our approval of a one (1) time transfer, in the case of a proposed assignment or transfer of this Agreement, of the Franchise and the Hyper Kidz Business from one or more individuals to a corporation or comparable legal entity which conducts no business other than the Hyper Kidz Business, which is actually managed by you, in which such individual(s) maintain management control, and such individual(s) shall own and control the same percentage of the equity and voting power of all issued and outstanding Ownership Interests of
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz will not unreasonably withhold approval of a one-time transfer of the franchise and Hyper Kidz Business to a corporation or comparable legal entity if the franchisee is in full compliance with the Franchise Agreement. Additionally, the corporation or legal entity must conduct no business other than the Hyper Kidz Business and be actually managed by the franchisee.
Furthermore, the franchisee must maintain management control within the corporation or legal entity. The franchisee must also own and control the same percentage of equity and voting power of all issued and outstanding Ownership Interests of the corporation or legal entity as they did prior to the transfer. This condition ensures that the franchisee retains control and responsibility for the Hyper Kidz Business even after the transfer to a corporate entity.
This provision allows Hyper Kidz franchisees some flexibility in structuring their business while ensuring that the essential obligations and management of the franchise remain consistent. For a prospective franchisee, this means that incorporating the business is possible under certain conditions, but it requires maintaining active management and ownership control to secure Hyper Kidz's approval.