What actions are considered a 'Transfer' that would violate the Kidokinetics franchise agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.2.
Restrictions on Transfers by Franchisee.
Franchisee's rights and duties under this Agreement are personal to Franchisee and/or Franchisee's Principal(s), and Franchisor has made this Agreement in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee and/or Franchisee's Principals.
Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval, which will not be unreasonably withheld.
Franchisor may void any transfer made without such approval.
- 15.3. Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Kidokinetics Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor, except as provided in Section 15.6 of this Agreement.
A transfer of any stock in the Franchisee if it is a corporation or a transfer of any ownership rights in Franchisee if it is a partnership, a limited liability company or limited partnership is a Transfer and is prohibited without prior written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, a 'Transfer' encompasses a range of actions related to the franchise agreement, the Kidokinetics business, or its assets. Specifically, franchisees cannot directly or indirectly sell, assign, transfer, give, devise, convey, or encumber the agreement itself, any rights or interests within it, the Kidokinetics business, or any of its assets without obtaining prior written consent from Kidokinetics, except as outlined in Section 15.6 of the agreement.
Furthermore, the document specifies that transferring any stock within the franchisee's corporation or any ownership rights if the franchisee operates as a partnership, limited liability company, or limited partnership also constitutes a 'Transfer.' Such actions are strictly prohibited unless the franchisee secures written consent from Kidokinetics beforehand. Kidokinetics retains the right to void any transfer that occurs without this mandatory approval.
This provision is in place because Kidokinetics relies on the perceived individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of the franchisee and/or its principals when entering into the franchise agreement. Therefore, any change in ownership or control must be vetted and approved by Kidokinetics to ensure that the new party meets their standards and will uphold the integrity of the Kidokinetics brand and system. Franchisees need to be aware of these restrictions and adhere to the outlined procedures to avoid breaching the franchise agreement.