Does the Kidokinetics franchise agreement require franchisees to assent to a release that deprives them of rights and protections?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (a) A prohibition on your right to join an association of franchisees.
- (b) A requirement that you assent to a release, assignment, novation, waiver, or estoppel which deprives you of rights and protections provided in this act. This shall not preclude you, after entering into a Franchise Agreement, from settling any and all claims.
- (c) A provision that permits us to terminate a Franchise prior to the expiration of its term except for good cause. Good cause shall include your failure to comply with any lawful provision of the Franchise Agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
- (d) A provision that permits us to refuse to renew your Franchise without fairly compensating you by repurchase or other means for the fair market value at the time of expiration of your inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to us and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the Franchise business are not subject to compensation. This subsection applies only if: (i) the term of the Franchise is less than five years; and (ii) you are prohibited by the Franchise Agreement or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the Franchise or you do not receive at least six months' advance notice of our intent not to renew the Franchise.
- (e) A provision that permits us to refuse to renew a Franchise on terms generally available to
Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the franchise agreement's requirements regarding franchisees assenting to releases that may deprive them of certain rights and protections vary by state. In Michigan, any provision requiring a franchisee to assent to a release, assignment, novation, waiver, or estoppel that deprives them of rights and protections provided in the Michigan Franchise Investment Law is void and unenforceable. Similarly, in Washington, a release or waiver of rights may not include rights under the Washington Franchise Investment Protection Act except under specific conditions, such as a negotiated settlement with independent counsel. In North Dakota, sections requiring a general release, estoppel, or waiver as a condition of renewal or assignment may not be enforceable as they relate to releases of the North Dakota Franchise Investment Law.
For franchisees in Minnesota, the FDD and Franchise Agreement provisions that require signing a general release prior to renewing or transferring the franchise are deleted to the extent required by Minnesota law. This suggests that Kidokinetics acknowledges and complies with state-specific regulations that protect franchisees from waiving certain rights. In California, franchisees must sign a general release of claims when renewing or transferring their franchise; however, California Corporations Code Section 31512 voids any waiver of rights under the Franchise Investment Law, and Business and Professions Code Section 20010 voids any waiver of rights under the Franchise Relations Act.
These stipulations indicate that while Kidokinetics may initially present a standard franchise agreement, the enforceability of certain clauses, particularly those concerning releases and waivers, is subject to state laws designed to protect franchisees. Prospective franchisees should pay close attention to the addenda and riders specific to their state, as these documents outline the modifications made to the standard agreement to ensure compliance with local regulations. Franchisees should consult with legal counsel to fully understand their rights and protections under the franchise agreement and applicable state laws.