Do direct equity holders of a business entity franchisee need to sign the Kidokinetics Non-Disclosure and Non-Compete Agreement?

According to Kidokinetics's 2024 Franchise Disclosure Document, if the franchisee is a business entity, all officers, directors, and direct and indirect equity holders, including those of any business entity that directly or indirectly controls the franchisee, must sign the Non-Disclosure and Non-Compete Agreement. This agreement is included as Attachment F to the Franchise Agreement. This requirement ensures that all individuals with significant influence or ownership in the franchisee entity are bound by the confidentiality and non-compete obligations.

This provision is designed to protect Kidokinetics's confidential information and competitive advantage. By requiring all key stakeholders to sign the agreement, Kidokinetics aims to prevent the leakage of sensitive information and restrict individuals from engaging in activities that could harm the franchise system. This is a common practice in franchising to maintain brand integrity and protect trade secrets.

For a prospective Kidokinetics franchisee, this means that if you plan to operate the franchise through a corporation, LLC, or other business entity, you must ensure that all individuals holding equity, directly or indirectly, are willing to sign the Non-Disclosure and Non-Compete Agreement. This could impact the structure of your business and the involvement of potential investors or partners. It is important to discuss this requirement with all relevant parties before entering into the franchise agreement to avoid any future complications.