Are Kidokinetics franchisees prohibited from performing any act that is injurious to the goodwill associated with the franchise?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section In the Franchise or Other Agreement | Summary | |
|---|---|---|---|
| q. | Non-competition covenants during the term of the franchise | Section 18.5.1 | You, each principal, and your and your principals' spouses shall not, either directly or indirectly, for themselves or through, on behalf of, or in conjunction with, any person or entity: (i) divert, or attempt to divert, any business or customer of the Kidokinetics Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any children's sports or fitness business or any other business offering any other goods or services offered or authorized for sale by System franchisees ("Competing Business"); (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize our business or the business of any Kidokinetics franchisees (Subject to applicable state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees are indeed prohibited from performing any act that could be detrimental to the goodwill associated with the brand. Specifically, during the term of the franchise agreement, franchisees (including their principals and spouses) cannot directly or indirectly engage in activities that could harm the goodwill of the Kidokinetics system.
This restriction extends to actions such as diverting business to competitors, participating in competing businesses, or any other behavior that could negatively impact the brand's reputation. The FDD specifies that franchisees must not "do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System." This clause aims to protect the Kidokinetics brand and ensure that franchisees act in a manner that upholds the integrity and reputation of the franchise.
Furthermore, this prohibition continues even after the franchise agreement expires or is terminated. For a period of 24 months following termination or expiration, franchisees are still restricted from performing any act injurious or prejudicial to the goodwill associated with the Kidokinetics marks and system. This post-term restriction, combined with the non-compete clauses, ensures that former franchisees do not leverage their knowledge or association with Kidokinetics to harm the brand's image or steal customers.
This is a fairly standard clause in franchise agreements. It protects the franchisor's brand and reputation, which are key assets of the franchise system. Prospective franchisees should understand these restrictions and ensure they are committed to upholding the brand's standards throughout their involvement with Kidokinetics, and for a period of time after their involvement ends.