What costs can Kidokinetics set off against the purchase price of the franchisee's assets?

According to Kidokinetics's 2024 Franchise Disclosure Document, if Kidokinetics elects to purchase a franchisee's assets upon termination or expiration of the franchise agreement, it has the right to offset certain costs against the payment to the franchisee. These offsets include fees due from the franchisee for any independent appraiser, all amounts owed by the franchisee to Kidokinetics or its affiliates, and any costs related to an escrow arrangement, including reasonable legal fees. The remaining amount after these deductions will be paid to the franchisee in cash.

This provision is important for prospective franchisees to understand, as it outlines the financial implications of the termination or expiration of their franchise agreement. It clarifies that Kidokinetics can deduct outstanding debts and costs from the purchase price of the franchisee's assets, which could reduce the amount the franchisee receives. This is a fairly standard practice in franchising, as it protects the franchisor's financial interests and ensures that all outstanding obligations are settled before the franchisee exits the system.

For a prospective Kidokinetics franchisee, this means that maintaining good financial standing with the franchisor and its affiliates is crucial. Any unpaid fees, outstanding balances, or costs incurred due to disputes or escrow arrangements could be deducted from the asset purchase price. Therefore, franchisees should strive to manage their finances responsibly and resolve any financial issues with Kidokinetics promptly to avoid potential deductions upon termination or expiration of the agreement. Franchisees should also carefully review all invoices and statements from Kidokinetics and its affiliates to ensure accuracy and address any discrepancies in a timely manner.