Is a Kidokinetics franchisee obligated to implement computer systems, including software and hardware, as required by the franchisor?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
11.3. Computer Systems.
Kidokinetics
- 11.3.1.
Franchisee, at Franchisee's sole expense, shall install and maintain the management software, required applications and a computer system that complies with Franchisor's standards and specifications, including: (i) an office computer, a tablet computer, a telephone, a fax machine, and a smartphone; (ii) a custom and proprietary point of sale system (the "POS System"), if Franchisor makes such a POS System part of its proprietary operating system in the future; (iii) printers and other peripheral hardware or devices; (iv) archival back-up systems; (v) Internet access mode and speed; and (vi) physical, electronic, and other security systems (collectively, the "Computer System"); and Franchisee shall follow the procedures related thereto that Franchisor specifies in the Franchise Operations Manual or otherwise in writing.
- 11.3.2.
Franchisor may require Franchisee, at Franchisee's sole expense, to install and maintain systems that permit Franchisor to electronically access and retrieve any information stored in Franchisee's management software and other computer systems, including, without limitation, information concerning Gross Sales.
Upon Franchisor's request, Franchisee shall execute such documents as Franchisor deems necessary to permit Franchisor to electronically access and retrieve all information stored on Franchisee's office computer, tablet computer, and smartphone, and in Franchisee's management software and other computer systems.
There are no contractual limitations on Franchisor's right to access the information and data on Franchisee's POS System and Computer System.
Franchisee shall deliver to Franchisor a separate and distinct full access user name and temporary password, as well as all access codes, static internet protocol ("IP") addresses and other information to facilitate Franchisor's access to the data generated by and stored in Franchisee's computer, tablet or smartphone.
- 11.3.3.
Franchisor shall have the right, but not the obligation, to develop or designate: (i) computer software programs Franchisee must use in connection with any component of the Computer System (the "Required Software"), which Franchisee shall install at Franchisee's expense; (ii) updates, supplements, modifications, or enhancements to the Required Software, which Franchisee shall install at Franchisee's expense; (iii) the tangible media upon which Franchisee records data; and (iv) the database file structure of the Computer System.
Franchisee shall be responsible for the payment of all fees associated with the Required Software, Computer System and POS System.
- 11.3.4.
At Franchisor's request, Franchisee shall purchase or lease, and thereafter maintain, the Computer System and, if applicable, the Required Software.
Franchisee agrees to pay all fees associated with the use of Required Software, which may be payable to Franchisor or Franchisor's approved or designated suppliers.
Franchisee expressly agrees to strictly comply with Franchisor's standards and specifications for all items associated with Franchisee's Computer System and any Required Software.
Franchisee agrees, at its own expense, to keep its Computer System in good maintenance and repair and install such upgrades, additions, changes, modifications, substitutions, and/or replacements to Franchisee's Computer System or Required Software as Franchisor directs from time to time in writing.
Franchisee agrees its compliance with this Section 11.3.4 shall be at Franchisee's sole cost and expense.
- 11.3.5.
Franchisor may now or in the future create or designate a proprietary software program, and Franchisor will retain a proprietary interest in all databases, lists, templates, programs and any other software components that have been created and/or customized by Franchisor using the Computer System and/or Required Software (the "Proprietary Software").
Proprietary Software
may conduct, among other things, scheduling, accounting, inventory, and related activities. Franchisee must obtain the computer hardware necessary to implement the Proprietary Software into the Kidokinetics Business, and comply with all specifications and standards prescribed by Franchisor regarding the Proprietary Software as provided in the Franchise Operations Manual. This Proprietary Software will be Franchisor's proprietary product, and the information collected therefrom will be deemed Franchisor's confidential information. Franchisee agrees to sign Franchisor's then-current form of software license agreement for any Proprietary Software Franchisor may now or in the future create, pay any license fees associated with use of Proprietary Software, and upgrade the Proprietary Software as Franchisor designates.
- 11.3.6.
Franchisee is required to participate in any System-wide computer network, intranet system, or extranet system that Franchisor implements and may be required by Franchisor to use such computer network, intranet system, or extranet system to, among other things: (i) submit Franchisee's reports due under this Agreement to Franchisor online; (ii) view and print portions of the Franchise Operations Manual, including any updates or modifications thereto; (iii) download approved local advertising materials; (iv) communicate with Franchisor and other System franchisees; and (v) to complete any initial or ongoing training.
Franchisee agrees to use the facilities of any such computer network, intranet system or extranet system in strict compliance with the standards, protocols, and restrictions that Franchisor included in the Franchise Operations Manual, including those related to the encryption of confidential information and prohibitions against the transmission of libelous, derogatory or defamatory statements.
- 11.3.7.
Franchisee shall have and maintain adequate hardware and software in order to access the Internet at the speed required by Franchisor from time to time.
Franchisee shall maintain an electronic mail account with an Internet service provider acceptable to Franchisor.
Franchisee shall read all electronic mail related to the Kidokinetics Business on a daily basis and shall accept and acknowledge receipt of all electronic mail sent by Franchisor.
Franchisee shall not establish any website or other listing on the Internet except as provided and specifically permitted herein.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees are indeed obligated to implement computer systems, including specified hardware and software, as required by the franchisor. The franchisee is responsible for the costs associated with installing and maintaining a computer system that adheres to Kidokinetics's standards. This includes items such as an office computer, a tablet computer, a telephone, a fax machine, and a smartphone. Furthermore, franchisees must install and maintain any management software and required applications as specified by Kidokinetics.
Kidokinetics has the right to develop or designate computer software programs that franchisees must use, and franchisees are responsible for installing these at their own expense. This includes any updates, supplements, modifications, or enhancements to the required software. Franchisees are also responsible for all fees associated with the required software, computer system, and point of sale (POS) system, if applicable. Kidokinetics may also require franchisees to install and maintain systems that allow Kidokinetics to electronically access and retrieve any information stored in the franchisee's management software and other computer systems, including gross sales data.
Franchisees must also maintain adequate hardware and software to access the Internet at the speed required by Kidokinetics and maintain an electronic mail account with an Internet service provider acceptable to Kidokinetics. They are required to read all electronic mail related to the Kidokinetics business daily and acknowledge receipt of emails sent by Kidokinetics. Franchisees are prohibited from establishing any website or other listing on the Internet unless specifically permitted by Kidokinetics. These comprehensive requirements ensure that all Kidokinetics franchises operate with a standardized technology infrastructure, allowing for efficient communication, data management, and brand consistency across the system.