What constitutes a 'Transfer' of the Kidokinetics business that requires franchisor approval?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Kidokinetics Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor, except as provided in Section 15.6 of this Agreement.
A transfer of any stock in the Franchisee if it is a corporation or a transfer of any ownership rights in Franchisee if it is a partnership, a limited liability company or limited partnership is a Transfer and is prohibited without prior written consent of Franchisor.
If Franchisee has complied fully with this Agreement, Franchisor will not unreasonably withhold its consent of a Transfer that meets the following requirements:
- 15.3.1.
The proposed transferee must be an individual of good moral character or the principals of the transferee must all be of good moral character and otherwise meet Franchisor's then-applicable standards for franchisees;
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, a 'Transfer' that requires the franchisor's prior written approval includes directly or indirectly selling, assigning, transferring, giving, devising, conveying, or encumbering the Franchise Agreement itself, any rights or interests within it, the Kidokinetics business, or any of its assets (unless it's in the ordinary course of business). This also covers any such assignment, transfer, or encumbrance that happens by operation of law.
Furthermore, if the franchisee is a corporation, partnership, limited liability company, or limited partnership, any transfer of stock or ownership rights is also considered a Transfer requiring prior written consent from Kidokinetics. This is to ensure that the franchisor maintains control over who is operating a Kidokinetics franchise and that the new operator meets their standards.
Kidokinetics emphasizes that the rights and duties under the Franchise Agreement are personal to the franchisee and/or their principals. The franchisor enters the agreement based on their assessment of the individual and collective character, skills, aptitude, attitude, business ability, and financial capacity of the franchisee and/or their principals. Therefore, any change in ownership or control is subject to their approval to protect the Kidokinetics brand and system.