During my association with the Kidokinetics business, am I allowed to participate in any youth fitness business?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
In consideration for such specialized training, trade secrets, Confidential Information and rights, Franchisee and each Principal, if any, covenant that, except as otherwise approved in writing by Franchisor:
- 18.5.1.
During the term of this Agreement, Franchisee, each Principal, and the spouse of Franchisee and each Principal if any, shall not, either directly or indirectly, for themselves or through, on behalf of, or in conjunction with, any person or entity: (i) divert, or attempt to divert, any business or customer of the Kidokinetics Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any youth fitness business or any other business offering any other goods or services offered or authorized for sale by System franchisees ("Competing Business"); (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Kidokinetics franchisees.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, franchisees are restricted from participating in any youth fitness business during their association with Kidokinetics. Specifically, franchisees cannot act as an owner, partner, director, officer, employee, consultant, or agent in any youth fitness business or any business offering goods or services that Kidokinetics franchisees are authorized to sell. This restriction is in place to protect Kidokinetics' goodwill and confidential information.
This non-compete obligation extends to the franchisee, their principals, and their spouses. The FDD states that this restriction applies during the term of the Franchise Agreement. This means that while you are operating a Kidokinetics franchise, you and related parties cannot be involved in any competing business, whether directly or indirectly.
The restriction aims to prevent franchisees from diverting business or customers away from the Kidokinetics system. It also ensures that franchisees focus their efforts and resources on growing their Kidokinetics business without divided loyalties or potential conflicts of interest. This is a fairly standard practice in franchising, as franchisors typically want to prevent franchisees from using the franchisor's system and knowledge to benefit a competing business during the term of the franchise agreement.
After the termination or transfer of the franchise agreement, a different set of restrictions apply, including a geographic limitation. However, during the term of the agreement, the restriction on involvement in a competing business is absolute, subject to written approval from Kidokinetics. A prospective franchisee should carefully consider this restriction and ensure they are willing to commit fully to the Kidokinetics system before investing in a franchise.