What is the Kidokinetics franchisee required to do regarding defaults under any leases, subleases, notes, or receipt of revenues?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
16.2.5. defaults under any lease or sublease of the real property on which the Kidokinetics Business is located;
16.3. Upon 5 Days' Notice to Cure.
Franchisee will be deemed to be in default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, if Franchisee fails to cure the default within the time period set forth in this Section 16.3, effective immediately upon notice to Franchisee, if Franchisee, or any Principal, as the case may be: fails to pay when due any amounts due to Franchisor under this Agreement or any related agreement and does not correct the failure within five calendar days after written notice; provided, however, Franchisor has no obligation to give written notice of a late payment more than two times in any 12 month period, and the third such late payment in any 12 month period is a non-curable default under Section 16.2.19.
- 16.4. Upon 15 Days' Notice to Cure.
Franchisee will be deemed to be in default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, if any of the following defaults remain uncured for 15 calendar days after written notice:
- 16.4.1.
Franchisee fails to immediately endorse and deliver to Franchisor any payments due to Franchisor from any third party that is erroneously made to Franchisee.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to the 2024 Kidokinetics Franchise Disclosure Document, a franchisee is considered in default if they fail to meet their obligations under any leases or subleases for the real property where the Kidokinetics business is located. This is a significant issue because it can lead to the termination of the franchise agreement.
Additionally, Kidokinetics franchisees can be in default if they fail to pay amounts due to Kidokinetics under the Franchise Agreement or any related agreement. If the franchisee fails to correct the failure within five calendar days after written notice, Kidokinetics can terminate the agreement. However, Kidokinetics is only obligated to provide written notice for late payments twice in a 12-month period; a third late payment within that period constitutes a non-curable default.
Furthermore, the FDD states that Kidokinetics franchisees must immediately endorse and deliver to Kidokinetics any payments due to Kidokinetics from a third party that are erroneously made to the franchisee. Failure to do so within 15 calendar days after written notice also constitutes a default, potentially leading to the termination of the franchise agreement.