Can Kidokinetics establish other Kidokinetics Businesses outside of a franchisee's territory?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
stablishment.
As long as your Franchise Agreement is in effect, we will not establish, own or operate, or license others to establish, own or operate, any other Kidokinetics Business within your Territory. You are not granted any options, rights of first refusal or similar rights to acquire additional development rights or franchises anywhere, regardless of the proximity to your Kidokinetics Business.
We, and any party we designate, retains and will have the right to: (i) establish and operate, and license third parties the right to establish and operate, other Kidokinetics Businesses using the Marks and System at any location outside of the Territory; (ii) acquire, merge with, engage in joint ventures with, or otherwise affiliate with, and thereafter own and operate and franchise others the right to own and operate, any business of any kind, including businesses that offer products that are similar to those provided by a Kidokinetics Business, within or outside the Territory; (iii) open and operate, or license third parties the right to open or operate, businesses that offer products and services similar to the Kidokinetics Business under marks other than the Marks at any location; (iv) sell and distribute, directly or indirectly, or license others to sell and distribute, directly or indirectly, any products, services or merchandise, from any location or to any purchaser, through any channel or method of distribution (including, but not limited, to virtual classes, sales made by or through telemarketing, and/or on the Internet); (v) provide the services or sell products authorized for Kidokinetics Businesses to customers whose principal residence (or principal business office, if the customer is a business entity) is within a Kidokinetics franchisee's Territory if contact with the customer is initiated by the customer and not us; (vi) to use and license the use of technology to non-franchisee locations inside and outside the Territory; and (vii) engage in any other activities not expressly prohibited under this Agreement. Although we reserve the rights described, neither we nor any affiliate, currently operates, franchises or has plans to operate or franchise a business under a different trademark that sells or will sell goods or services similar to those offered by you or our other Franchises.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics retains the right to establish Kidokinetics businesses outside of a franchisee's territory. Specifically, Kidokinetics, or any party they designate, has the right to establish and operate, or license third parties to establish and operate, other Kidokinetics Businesses using the Kidokinetics marks and system at any location outside of the franchisee's territory. This means that while a franchisee is protected from other franchised Kidokinetics locations within their territory, Kidokinetics can expand elsewhere without restriction.
Kidokinetics also retains broad rights regarding other business ventures. They can acquire, merge, or engage in joint ventures with any business, even those offering similar products, either inside or outside a franchisee's territory. Kidokinetics can also open or license businesses that offer similar products and services under different trademarks at any location. Furthermore, Kidokinetics maintains the right to sell and distribute any products, services, or merchandise through any channel of distribution, including virtual classes or online sales, from any location to any purchaser.
These provisions highlight that a Kidokinetics franchisee's territory provides limited protection against competition from the franchisor itself or other ventures affiliated with Kidokinetics outside of the franchisee's territory. While Kidokinetics states that they do not currently operate or franchise a business under a different trademark that sells similar goods or services, they retain the right to do so in the future.
Prospective franchisees should carefully consider these factors and understand that their protected territory only applies to other Kidokinetics franchises and not to other business activities of the franchisor. It would be prudent to discuss Kidokinetics's future expansion plans and potential competitive ventures with the franchisor before investing in a franchise.