What covenants contained in Article 18 must a franchisee comply with after the termination of the Kidokinetics agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
17.1.7. comply with the non-disclosure and non-competition covenants contained in Article 18; and
18.5.2.
Upon the expiration or earlier termination of this Agreement, or upon a Transfer and continuing for 24 months, Franchisee and Principals, and the spouse of Franchisee and each Principal if any, shall not, either directly or indirectly, for themselves 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 Competing Business within a twenty (20) mile radius of the perimeter of (a) the Territory being granted hereunder, or (b) any other Territory licensed by Franchisor as of the date of expiration or termination of this Agreement; (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Kidokinetics franchisees; or (v) solicit business from customers of Franchisee's former Kidokinetics Business or contact any of Franchisor's suppliers or vendors for any competitive business purpose.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Article 17.1.7 states that upon termination of the franchise agreement, the franchisee must comply with the non-disclosure and non-competition covenants contained in Article 18. Specifically, Article 18.5.2 outlines these post-termination obligations.
For a period of 24 months after the termination or transfer of the agreement, the franchisee, principals, and their spouses must not engage in certain activities. These include diverting or attempting to divert business or customers of Kidokinetics or other franchisees to any competitor, participating in a Competing Business within a 20-mile radius of the territory granted or any other territory licensed by Kidokinetics, performing any act injurious to the goodwill associated with the Kidokinetics marks and system, interfering with the business of Kidokinetics or its franchisees, or soliciting business from customers of the former Kidokinetics business or contacting Kidokinetics's suppliers or vendors for competitive purposes.
These restrictions are designed to protect Kidokinetics's business interests and prevent former franchisees from unfairly competing using the knowledge and relationships gained during their time with the franchise. Kidokinetics asserts that these covenants are reasonable and will not impose undue hardship on the franchisee, as they should have other skills and experience to derive income from other endeavors.