What are the consequences if a Kidokinetics franchisee falsifies reports required by the franchisor?

According to Kidokinetics's 2024 Franchise Disclosure Document, if a franchisee falsifies any report required by the franchisor, it constitutes a default under the franchise agreement. This gives Kidokinetics the right to terminate the agreement.

Beyond termination, Kidokinetics has options to address franchisee defaults. They can choose to cure the default on behalf of the franchisee, with the franchisee bearing the costs. Alternatively, Kidokinetics can take over the operation of the Kidokinetics Business until they determine the default has been resolved and the franchisee is compliant with the agreement.

If Kidokinetics opts to operate the business, the franchisee must pay Kidokinetics 10% of the Gross Sales generated during the period of operation, in addition to all other fees outlined in the agreement. This provision highlights the significant financial implications for a franchisee who fails to meet the reporting requirements and other standards set by Kidokinetics.