What constitutes 'good cause' for termination of a Kidokinetics franchise in Indiana?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
of the FDD is deleted and the following is inserted in its place:
Indiana law applies to disputes covered by Indiana franchise laws; otherwise Franchisor's Choice of Law State law applies.
Despite anything to the contrary in the Franchise Agreement, the following provisions will supersede and apply to all Franchises offered and sold in the State of Indiana:
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- The laws of the State of Indiana supersede any provisions of the FDD, the Franchise Agreement, or Franchisor's Choice of Law State law, if such provisions are in conflict with Indiana law.
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- The prohibition by Indiana Code 23-2-2.7-1(7) against unilateral termination of the Franchise without good cause or in bad faith, good cause being defined under law as including any material breach of the Franchise Agreement, will supersede the provisions of the Franchise Agreement relating to termination for cause, to the extent those provisions may be inconsistent with such prohibition.
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Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Indiana law impacts franchise terminations. Specifically, Indiana Code 23-2-2.7-1(7) states that Kidokinetics cannot unilaterally terminate a franchise without 'good cause' or in bad faith. The FDD clarifies that 'good cause' includes any material breach of the Franchise Agreement. This Indiana law supersedes any conflicting termination provisions in the Franchise Agreement itself.
For a prospective Kidokinetics franchisee in Indiana, this means that the franchise agreement cannot allow for termination without a significant violation of the agreement on the franchisee's part. The Indiana Deceptive Franchise Practices Law also voids any provision that requires the franchisee to prospectively waive rights or release Kidokinetics from liabilities imposed by that law.
This protection is significant because it prevents Kidokinetics from terminating a franchise based on minor infractions or subjective reasons. The franchisee has recourse under Indiana law if they believe the termination is without good cause or in bad faith. However, it is important to note that the definition of 'material breach' is subject to interpretation and potential legal challenges. A Kidokinetics franchisee should seek legal counsel to fully understand their rights and obligations under Indiana law and the franchise agreement.