What is the Kidokinetics franchisee's obligation upon receiving written notice of a reduced covenant scope?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
In addition, Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Agreement or any portion thereof, without Covenantor's or Franchisee's consent, effective immediately upon receipt by Covenantor of written notice thereof, and Covenantor agrees to forthwith comply with any covenant as so modified.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the franchisee must immediately comply with any covenant as modified upon receiving written notice from the franchisor regarding a reduction in the scope of any covenant. This means that Kidokinetics has the right to unilaterally reduce the scope of any covenant within the agreement without needing the franchisee's consent. The change becomes effective as soon as the franchisee receives written notification.
This clause gives Kidokinetics significant flexibility to adjust the restrictions placed on franchisees. For example, if the original agreement prevents a franchisee from operating a similar business within a 50-mile radius after the franchise term, Kidokinetics could reduce that radius to 10 miles. The franchisee would then be obligated to adhere to the new, smaller radius immediately upon receiving notice.
This immediate compliance requirement places a responsibility on the franchisee to stay informed of any modifications to their agreement and to adapt their business practices accordingly. While this provides Kidokinetics with the agility to respond to changing market conditions or specific franchisee situations, it also introduces an element of uncertainty for the franchisee, who must be prepared to adjust their operations swiftly based on the franchisor's decisions.