Does the Kidokinetics franchise agreement create a partnership between the franchisee and franchisor?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, commitments and understandings contained herein, the parties hereby agree as follows:
AGREEMENT
- GRANT OF FRANCHISE. Franchisor hereby grants to Franchisee and Franchisee accepts, upon the terms and conditions herein contained, the license to operate a Kidokinetics franchise (the "Kidokinetics Business" or the "Franchised Business"), using only the Marks licensed hereunder, in strict conformity with the System, which may be changed, improved and further developed by Franchisor from time to time. This grant applies only to the territory which will be selected by Franchisee and approved by Franchisor, which is more particularly described in Section 2 herein and in Attachment "B" (the "Territory"). Franchisee understands and acknowledges that present or future franchisees of Franchisor may operate under different forms of franchise agreements and consequently that Franchisor's obligations and rights with respect to its various franchisees may differ materially in certain circumstances.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
Based on the 2024 Kidokinetics Franchise Disclosure Document, the franchise agreement does not create a partnership between the franchisee and franchisor. The agreement explicitly grants the franchisee a license to operate a Kidokinetics franchise within a specific territory, using the franchisor's marks and system. This arrangement is defined by the terms and conditions outlined in the agreement, indicating a licensor-licensee relationship rather than a partnership.
Kidokinetics retains the right to modify and improve the system, and the franchisee is obligated to operate in accordance with the Franchise Operations Manual. The franchisee's rights and duties are personal, and any transfer of the agreement requires the franchisor's approval. This control over the brand, system standards, and transfer of ownership further supports the franchise relationship rather than a partnership.
Furthermore, the franchisee is responsible for their own financial obligations, including payments to suppliers, lessors, creditors, and taxes. The franchisee also indemnifies Kidokinetics from any liabilities arising from their operation of the Kidokinetics business. These financial responsibilities are typical of a franchise arrangement where the franchisee operates as an independent entity under the franchisor's brand and system, and are inconsistent with a partnership where profits and losses are shared.