What constitutes an automatic termination of the Kidokinetics franchise agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Default and Automatic Termination. Franchisee will be deemed to be in default under this Agreement, 16.1. and all rights granted herein will automatically terminate without notice to Franchisee, if Franchisee becomes insolvent or makes a general assignment for the benefit of creditors; or if Franchisee or any Principal files a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof, or admits in writing its inability to pay its debts when due; or if Franchisee or any Principal is adjudicated as bankrupt or insolvent in proceedings filed against Franchisee or any Principal under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state; or if a bill in equity or other proceeding for the appointment of a receiver of Franchisee or other custodian for Franchisee's business or assets is filed and consented to by Franchisee; or if a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if proceedings for a composition with creditors under any state or federal law should be instituted by or against Franchisee; or if a final judgment remains unsatisfied or of record for 30 days or longer (unless supersedeas bond is filed); or if Franchisee is dissolved; or if execution is levied against Franchisee's business or property; or if suit to foreclose any lien or mortgage against the Kidokinetics Business premises or equipment is instituted against Franchisee and not dismissed within 30 days.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to the 2024 Kidokinetics Franchise Disclosure Document, the franchise agreement can be automatically terminated under specific default conditions. These conditions primarily relate to financial instability or legal proceedings that significantly impair the franchisee's ability to operate the business.
Specifically, the Kidokinetics franchise agreement will automatically terminate if the franchisee becomes insolvent, makes an assignment for the benefit of creditors, or files a voluntary petition under bankruptcy law. Similarly, the agreement terminates automatically if the franchisee is adjudicated bankrupt or insolvent, consents to the appointment of a receiver, or faces proceedings for composition with creditors. Further, a final judgment remaining unsatisfied for 30 days or longer, the dissolution of the franchisee, execution levied against the business, or the institution of foreclosure proceedings against the business premises that are not dismissed within 30 days also trigger automatic termination.
These automatic termination clauses are designed to protect Kidokinetics's interests by ensuring that franchisees maintain financial solvency and legal compliance. Prospective franchisees should be aware of these conditions and understand the implications of financial distress or legal challenges on their franchise agreement. It is important to note that 'Principal' is also subject to the same conditions.