What is the exception to the 'Prohibited Activities' regarding ownership in a publicly-traded company that is a Competitive Business for Kidokinetics?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Prohibited Activities" means any or all of the following: (i) owning, operating, or having any other interest (as an owner, partner, director, officer, employee, manager, consultant, shareholder, creditor, representative, agent, or in any similar capacity) in a Competitive Business (other than owning an interest of five percent (5%) or less in a publicly-traded company that is a Competitive Business); (ii) diverting or attempting to divert any business from us (or one of our affiliates or franchisees); and/or (iii) inducing or attempting to induce any customer of ours (or of one of our affiliates or franchisees) to transfer their business to you or to any other person that is not then a franchisee of ours.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, a franchisee is generally prohibited from having an interest in a Competitive Business. However, there is an exception to this rule.
Specifically, the franchisee is allowed to own an interest of five percent (5%) or less in a publicly-traded company that is considered a Competitive Business. This means that a franchisee can invest in a publicly-traded company that competes with Kidokinetics, as long as their ownership stake does not exceed 5%.
This exception provides franchisees with some flexibility in their investment options, allowing them to diversify their portfolio without necessarily violating the terms of the franchise agreement. However, it is crucial for franchisees to ensure that their ownership stake remains at or below the 5% threshold to avoid any potential conflicts of interest or breaches of contract with Kidokinetics.