Does the Kidokinetics franchise agreement specify who benefits from the goodwill generated by the franchisee's use of the Intellectual Property?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.3 Goodwill.
Franchisee understands and agrees that any and all goodwill arising from Franchisee's use of the Intellectual Property and the System inures solely and exclusively to the benefit of Franchisor and Licensor, and upon expiration or termination of this Agreement and the license granted, no monetary amount will be assigned as attributable to any goodwill associated with Franchisee's use of the Intellectual Property.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the franchise agreement clearly states that any goodwill arising from a franchisee's use of the Intellectual Property and the Kidokinetics system benefits the franchisor and licensor exclusively. This means that the brand recognition and positive reputation built by the franchisee's efforts legally accrue to Kidokinetics Franchise LLC.
This has significant implications for a prospective franchisee. Upon expiration or termination of the franchise agreement, the franchisee will not be entitled to any monetary compensation for the goodwill they helped create during the term of their agreement. This is a common practice in franchising, as the brand and system are owned by the franchisor, and the franchisee is essentially renting the right to operate under that brand.
Kidokinetics also emphasizes the importance of protecting its brand and reputation. The agreement specifies that actions damaging to the goodwill of the system or marks can result in termination. Franchisees are expected to maintain high standards of service and appearance to uphold the brand's image. This underscores the franchisor's focus on maintaining a consistent brand experience across all franchise locations, which ultimately benefits the franchisor through enhanced brand recognition and value.
Therefore, a potential Kidokinetics franchisee should understand that while their efforts contribute to building the brand's reputation in their local market, the financial benefits of that goodwill will primarily accrue to the franchisor, especially upon termination or expiration of the franchise agreement. This is a crucial consideration when evaluating the long-term financial prospects of a Kidokinetics franchise.