Does the Kidokinetics Franchise Agreement allow the franchisor to operate or permit other franchisees to operate a Kidokinetics Business within the franchisee's territory?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
ment and incorporated into this Agreement. Except as otherwise provided for in this Agreement, as long as Franchisee is in compliance with the terms and conditions hereof, Franchisor agrees it will not operate, nor permit any other franchisee to operate, a Kidokinetics Business within the Territory using the same Marks. Franchisee acknowledges that other franchisees may operate their Kidokinetics Businesses from home offices located within the Territory, however, such Franchisee shall not be granted the right to operate within the Territory. Franchisee may not operate outside the Territory without express written authorization from Franchisor.
- 2.2. Reservation of Rights. Franchisee acknowledges and agrees that Franchisor and any parties Franchisor designates will have the right to: (i) establish and operate, and license third parties the right to establish and operate, other franchised 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 Franchised 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 Franchised 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 Franchisee's Territory if contact with the customer is initiated by the customer and not Franchisor; (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.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the Franchise Agreement generally protects a franchisee's territory. Kidokinetics agrees that, as long as the franchisee complies with the terms of the agreement, Kidokinetics will not operate, nor permit any other franchisee to operate, a Kidokinetics Business within the Territory using the same Marks. This means that Kidokinetics franchisees are granted a protected territory where the franchisor will not directly compete or allow other franchisees to compete under the same brand name. However, other franchisees may operate their Kidokinetics Businesses from home offices located within the Territory, but such franchisees are not granted the right to operate within the Territory.
However, the agreement also includes certain reservations of rights for Kidokinetics. Kidokinetics retains the right to establish and operate, and license third parties to operate, other franchised businesses using the Marks and System at any location outside of the Territory. Kidokinetics also has the right to acquire, merge, or affiliate with any business, including those offering similar products, within or outside the Territory. Kidokinetics can also open or license others to open businesses offering similar products and services under different marks at any location.
Furthermore, Kidokinetics reserves the right to sell and distribute products or services through any channel, including virtual classes or the Internet, and to provide services to customers within the franchisee's territory if the customer initiates contact. Kidokinetics is not required to compensate the franchisee even if it exercises its rights within the Territory. These stipulations mean that while the franchisee has some territorial protection, Kidokinetics retains considerable freedom to operate and license other businesses, including those that may compete with the franchisee, particularly through alternative channels or under different brand names.