Can Kidokinetics establish or franchise others to establish another Kidokinetics Business within a franchisee's designated territory?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- TERRITORY
You and we will agree on your territory before you sign the Franchise Agreement. You will not receive an exclusive territory ("Territory"). You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. Except as described below, we will not establish or franchise others to establish another Kidokinetics Business within your designated Territory during the term of the Franchise Agreement. Your Territory for each Kidokinetics Business will contain a minimum population of approximately 250,000 persons. You may offer the Kidokinetics® sports fitness programs to all schools, parks, community centers, summer camps, hotels, gyms, health centers and similar establishments located within your Territory.
The Kidokinetics Business is a mobile business that provides sports fitness programs to children at schools, parks, community centers, summer camps, hotels, gyms, health centers and similar establishments within a designated territory. You may choose to have a home-based office for your Kidokinetics Business, located within your Territory. If you wish to rent commercial office space, such space must also be located within your Territory, and you must request our acceptance. In our experience and that of
our franchisees, the majority of these establishments do not charge any fee for the right to provide Kidokinetics services on their premises. However, an establishment may require you to pay an access or rental fee to provide services on its premises. An establishment could charge a flat fee per month in which you hold an event on its premises. Alternatively, an establishment may require you to pay a percentage of your event revenue. We estimate an approximate average of 5% of your annual revenue. These estimates take into consideration that establishments may charge or negotiate varying amounts at their discretion, and others will not impose any fee or revenue share. Because these establishments are independent third parties, you and they will arrange for these and other terms, and we do not have any control over or involvement with potential charges set by any establishment.
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;
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees are not granted an exclusive territory. However, Kidokinetics states that, with some exceptions, it will not establish or franchise others to establish another Kidokinetics Business within a franchisee's designated territory during the term of the Franchise Agreement. The franchisee's territory will contain a minimum population of approximately 250,000 persons, and the franchisee may offer Kidokinetics sports fitness programs to establishments such as schools, parks, and community centers within that territory.
Kidokinetics retains the right to conduct certain activities that could impact a franchisee's territory. Kidokinetics can establish and operate, or license third parties to establish and operate, other Kidokinetics Businesses outside of the franchisee's territory. They can also engage in business ventures, including those offering similar products, within or outside the territory. Additionally, Kidokinetics can operate businesses offering similar services under different trademarks. They also reserve the right to sell and distribute products or services through various channels, including virtual classes and the internet, without restriction.
Kidokinetics also retains the right to provide services or sell products to customers within a franchisee's territory if the customer initiates contact. The franchisee is limited to advertising only within their territory and providing services to customers within that territory unless they receive prior written approval from Kidokinetics to operate outside of it. Kidokinetics may withdraw this approval at any time. These stipulations mean that while franchisees are granted a territory, Kidokinetics retains considerable freedom to operate and expand, potentially creating competition or overlap.