What constitutes unfair competition during the relationship as a manager or officer of a Kidokinetics franchisee?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- **4.
Unfair Competition During Relationship.** You agree not to unfairly compete with us at any time while you are a manager or officer of Franchisee's Kidokinetics business by engaging in any Prohibited Activities.
- **2.
Background**. You are a manager or officer of Franchisee.
As a result of this relationship, you may gain knowledge of our System.
You understand that protecting the Intellectual Property and our System are vital to our success and that of our franchisees and that you could seriously jeopardize our entire System if you were to unfairly compete with us.
In order to avoid such damage, you agree to comply with the terms of this Agreement.
Know-How and Intellectual Property.
You agree: (i) you will not use the Know-how in any business or capacity other than the Kidokinetics business operated by Franchisee; (ii) you will maintain the confidentiality of the Know-how at all times; (iii) you will not make unauthorized copies of documents containing any Know-how; (iv) you will take such reasonable steps as we may ask of you from time to time to prevent unauthorized use or disclosure of the Know-how; and (v) you will stop using the Know-how immediately if you are no longer a manager or officer of Franchisee's Kidokinetics business.
WHEREAS, Franchisor and Franchisee have agreed on the importance of restricting the use, access and dissemination of the Confidential Information, and Franchisee therefore has agreed to obtain from Covenantor a written agreement protecting the Confidential Information and further protecting the System against unfair competition; and
- a. Covenantor shall, at all times, maintain the confidentiality of the Confidential Information and shall use such Confidential Information only in the course of his or her association with the Kidokinetics Business operating under the Franchise Agreement(s).
2. COVENANTS NOT TO COMPETE.
- a. In order to protect the goodwill and unique qualities of the System, and in consideration for the disclosure to Covenantor of the Confidential Information, Covenantor further agrees and covenants that during Covenantor's association with the Kidokinetics Business, Covenantor shall not, for Covenantor or through, on behalf of or in conjunction with any person or entity:
- (i) divert, or attempt to divert, any business or customer of the Kidokinetics Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise:
- (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any youth fitness business or any other business offering any other goods or services offered or authorized for sale by System franchisees (a "Competing Business").
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, if you are a manager or officer of a Kidokinetics franchisee, you agree not to unfairly compete with Kidokinetics at any time while you are in that role by engaging in any Prohibited Activities. Prohibited Activities include: owning, operating, or having any interest in a Competitive Business (other than owning an interest of five percent (5%) or less in a publicly-traded company that is a Competitive Business); diverting or attempting to divert any business from Kidokinetics (or one of its affiliates or franchisees); and/or inducing or attempting to induce any customer of Kidokinetics (or of one of its affiliates or franchisees) to transfer their business to you or to any other person that is not then a franchisee of Kidokinetics.
As a manager or officer, you acknowledge that you may gain knowledge of Kidokinetics' System, which includes Know-how, proprietary programs and products, the Manual, and the operating system. Protecting the Intellectual Property and System is vital to the success of Kidokinetics and its franchisees. You agree not to use the Know-how in any business or capacity other than the Kidokinetics business operated by the Franchisee, maintain the confidentiality of the Know-how, not make unauthorized copies of documents containing any Know-how, take reasonable steps to prevent unauthorized use or disclosure of the Know-how, and stop using the Know-how immediately if you are no longer a manager or officer of the Franchisee's Kidokinetics business.
The agreement highlights the importance of restricting the use, access, and dissemination of Confidential Information to protect the System against unfair competition. This includes maintaining the confidentiality of the Confidential Information and using it only in association with the Kidokinetics Business operating under the Franchise Agreement. You are prohibited from diverting or attempting to divert any business or customer of the Kidokinetics Business or other franchisees in the System to any competitor, and from participating in any youth fitness business or any other business offering any other goods or services offered or authorized for sale by System franchisees (a "Competing Business").
These restrictions are designed to protect Kidokinetics' interests and the interests of its franchisees by preventing individuals with access to confidential information and the System from using that knowledge to unfairly compete. Prospective franchisees should carefully review these non-compete provisions and understand the scope of activities that are considered prohibited during their association with the Kidokinetics business.