Can Kidokinetics acquire any other business regardless of the location of that business' facilities?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor.
- 2.2. Reservation of Rights. Franchisee acknowledges and agrees that Franchisor and any parties Franchisor designates will have the right to: (i) establish and operate, and license third parties the right to establish and operate, other franchised businesses using the Marks and System at any location outside of the Territory; (ii) acquire, merge with, engage in joint ventures with, or otherwise affiliate with, and thereafter own and operate and franchise others the right to own and operate, any business of any kind, including businesses that offer products that are similar to those provided by a Franchised Business, within or outside the Territory; (iii) open and operate, or license third parties the right to open or operate, businesses that offer products and services similar to the Franchised Business under marks other than the Marks at any location; (iv) sell and distribute, directly or indirectly, or license others to sell and distribute, directly or indirectly, any products, services or merchandise, from any location or to any purchaser, through any channel or method of distribution (including, but not limited, to virtual classes, sales made by or through telemarketing, and/or on the Internet); (v) provide the services or sell products authorized for Kidokinetics Businesses to customers whose principal residence (or principal business office, if the customer is a business entity) is within Franchisee's Territory if contact with the customer is initiated by the customer and not Franchisor; (vi) to use and license the use of technology to non-franchisee locations inside and outside the Territory; and (vii) engage in any other activities not expressly prohibited under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, Kidokinetics retains the right to acquire other businesses of any kind, regardless of their location. Specifically, Kidokinetics can "acquire, merge with, engage in joint ventures with, or otherwise affiliate with, and thereafter own and operate and franchise others the right to own and operate, any business of any kind, including businesses that offer products that are similar to those provided by a Franchised Business, within or outside the Territory".
This clause in the franchise agreement means that Kidokinetics is not restricted from expanding its business interests through acquisitions, mergers, or joint ventures, even if those businesses compete with existing Kidokinetics franchises or are located outside a franchisee's designated territory. This could potentially introduce competition or alter the market landscape for a Kidokinetics franchisee.
However, Kidokinetics makes a representation that it will not convert any acquired facilities operating within a franchisee's territory into a Kidokinetics franchise. This provides some assurance that the acquired business will not directly become a competing Kidokinetics outlet within the franchisee's territory. It is important to note that this representation does not prevent Kidokinetics from operating the acquired business under a different brand or offering different services within the franchisee's territory.
Prospective franchisees should consider this clause carefully, as it highlights the potential for Kidokinetics to diversify and expand its business in ways that could impact individual franchises. While the assurance against converting acquired facilities to Kidokinetics franchises offers some protection, franchisees should be aware of the broader implications of Kidokinetics' right to acquire other businesses.