What constitutes a 'Transfer' of the Kidokinetics business requiring Franchisor consent?
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.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, a 'Transfer' requiring 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 (except in the ordinary course of business). This also applies to any such assignment, transfer, or encumbrance that occurs by operation of law.
Specifically, the document states that a transfer of any stock in the franchisee, if the franchisee is a corporation, or a transfer of any ownership rights in the franchisee, if it's a partnership, limited liability company, or limited partnership, also constitutes a Transfer. Such actions are prohibited without the prior written consent of Kidokinetics.
This means that franchisees must seek approval from Kidokinetics before making significant changes to the ownership or control of their franchise. This provision allows Kidokinetics to maintain standards and ensure that any new owners or stakeholders meet their criteria for franchisees. Failing to obtain this consent can result in the transfer being voided by Kidokinetics. Prospective franchisees should carefully consider these restrictions on transferability, as they could impact their exit strategy or ability to bring in partners or investors.