factual

Can Kidokinetics acquire a non-competitive franchise network regardless of the location of that chain's facilities?

Kidokinetics Franchise · 2024 FDD

Answer 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 the 2024 Kidokinetics Franchise Disclosure Document, Kidokinetics retains specific rights regarding business affiliations. Kidokinetics has the right to acquire, merge with, engage in joint ventures with, or otherwise affiliate with any business of any kind. This includes businesses that offer similar products to those provided by a Kidokinetics franchise, and these affiliations can occur either within or outside of a franchisee's territory.

This clause in the franchise agreement means that Kidokinetics is not restricted from partnering with or acquiring other businesses, even if those businesses compete with existing franchisees or operate in their territories. However, Kidokinetics represents that it will not convert any such acquired facilities that are operating within the Territory to a Kidokinetics franchise.

For a prospective franchisee, this indicates that while they are granted a territory, Kidokinetics maintains the flexibility to expand its business through various means, including acquiring other companies. While Kidokinetics states they will not convert acquired facilities within a franchisee's territory to a Kidokinetics franchise, the acquisition of a competing business could still impact the franchisee's market share and competitive landscape. Franchisees should consider this potential for increased competition when evaluating the franchise opportunity.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.