What are the conditions under which Kidokinetics can terminate the franchise agreement without allowing the franchisee an opportunity to cure?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
16.2.1. fails to open the Kidokinetics Business within the time and in the manner specified in Article 7.
16.2.2. falsifies any report required to be furnished Franchisor hereunder;
16.2.3. abandons the Kidokinetics Business for a period of five consecutive days or more, with the term "abandon" including any conduct which indicates a desire or intent to discontinue operating the Kidokinetics Business in accordance with the terms of this Agreement and will apply in any event if Franchisee fails to operate the Kidokinetics Business as a Kidokinetics Franchise LLC. business for a period of 5 or more consecutive days without Franchisor's prior written approval;
16.2.4. fails to comply with any federal, state or local law, rule or regulation, applicable to the operation of the Kidokinetics Business, including, but not limited to, the failure to pay taxes;
16.2.5. defaults under any lease or sublease of the real property on which the Kidokinetics Business is located;
16.2.6. understates Gross Sales by 5% at any time, or understates Gross Sales by any amount on three occasions or more, whether or not cured on any or all of those occasions;
16.2.7. permits a Transfer in violation of the provisions of Article 15 of this Agreement;
16.2.8. fails, or Franchisee's legal representative fails, to transfer the interests in this Franchise Agreement and the Kidokinetics Business Location upon death or permanent disability of Franchisee or any Principal of Franchisee in accordance with the procedures set forth in Article 15 of this Agreement.
16.2.9. has misrepresented or omitted material facts in applying for the Franchised Business;
16.2.10.is convicted of, or pleads no contest to, a felony or a crime that could damage the goodwill associated with the Marks, or does anything to harm the reputation of the System or the goodwill associated with the Marks:
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to the 2024 Kidokinetics Franchise Disclosure Document, there are several conditions under which Kidokinetics can terminate the franchise agreement immediately, without providing an opportunity for the franchisee to correct the issue. These non-curable defaults, outlined in Section 16.2, cover a range of serious violations of the franchise agreement.
Kidokinetics can terminate the agreement without an opportunity to cure if the franchisee fails to open the Kidokinetics Business within the specified timeframe, falsifies reports to the franchisor, abandons the business for five or more consecutive days without approval, fails to comply with applicable laws, defaults on leases, understates gross sales by 5% at any time or by any amount on three or more occasions, permits unauthorized transfers of the franchise, or fails to transfer interests in the franchise upon death or disability. Additional grounds for immediate termination include misrepresentation or omission of material facts in the franchise application, conviction of a felony or any crime damaging to the brand's goodwill, or actions harming the reputation of the Kidokinetics system.
These termination conditions highlight the importance of adhering to the franchise agreement and maintaining ethical and legal compliance. For a prospective Kidokinetics franchisee, understanding these potential pitfalls is crucial to avoid immediate termination and protect their investment. Franchisees should ensure they have robust systems in place for accurate reporting, legal compliance, and operational management to mitigate the risk of non-curable defaults.