What is the Kidokinetics franchisee required to do with its organizational documents to ensure compliance with the franchise agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
idokinetics Business Location and the Territory;
- 10.2.3. Franchisee's organizational documents will, at all times, provide that the activities of Franchisee are confined exclusively to the operation of the Franchised Business granted herein, unless otherwise consented to in writing by Franchisor, which consent may be withheld by Franchisor in Franchisor's sole discretion;
- 10.2.4. The execution of this Agreement and the consummation of the transactions contemplated in this Agreement are within Franchisee's power and have been duly authorized by Franchisee;
- 10.2.5. Copies of Franchisee's organizational documents, other governing documents, resolutions or consents of the governing board authorizing entry into and performance of this Agreement, and any certificates, buy-sell agreements or other documents restricting the sale or transfer of equity interests in Franchisee, and any other documents as may be reasonably required by Franchisor will be furnished to Franchisor prior to the execution of this Agreement;
- 10.2.6. The ownership interests in Franchisee are accurately and completely described on Attachment D of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees must adhere to specific requirements regarding their organizational documents to maintain compliance with the franchise agreement. The franchisee's organizational documents must stipulate that their business activities are strictly limited to operating the Kidokinetics franchised business, unless the franchisor provides written consent to engage in other activities, which Kidokinetics can withhold at its discretion. This ensures that the franchisee remains focused on the Kidokinetics business and does not divert resources or attention to other ventures without approval.
Prior to the execution of the franchise agreement, the franchisee is obligated to furnish Kidokinetics with copies of their organizational documents, any other governing documents, resolutions or consents from their governing board authorizing the agreement, and any documents that restrict the sale or transfer of equity interests in the franchise. Additionally, the franchisee must provide any other documents reasonably requested by Kidokinetics. This comprehensive disclosure allows Kidokinetics to assess the franchisee's business structure, authorization, and any potential limitations on ownership transfers.
Furthermore, the franchisee must accurately and completely describe the ownership interests in Attachment D of the franchise agreement. Any changes in ownership must be immediately reported to Kidokinetics with an updated list of all owners. Kidokinetics also retains the right to request a list of the franchisee's owners at any time. These requirements ensure that Kidokinetics is always aware of the current ownership structure of the franchise, which is crucial for maintaining accountability and control within the franchise system.