factual

Can a Kidokinetics franchisee's spouse be involved in any activity that interferes with the business of the franchisor or other franchisees during the term of the agreement?

Kidokinetics Franchise · 2024 FDD

Answer from 2024 FDD Document

h Principal, if any, are entering into this Agreement. In consideration for such specialized training, trade secrets, Confidential Information and rights, Franchisee and each Principal, if any, covenant that, except as otherwise approved in writing by Franchisor:

  • 18.5.1. During the term of this Agreement, Franchisee, each Principal, and the spouse of Franchisee and each Principal if any, 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 youth 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 the business of the Franchisor or any Kidokinetics franchisees.
  • 18.5.2. Upon the expiration or earlier termination of this Agreement, or upon a Transfer and continuing for 24 months, Franchisee and Principals, and the spouse of Franchisee and each Principal if any, 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 Competing Business within a twenty (20) mile radius of the perimeter of (a) the Territory being granted hereunder, or (b) any other Territory licensed by Franchisor as of the date of expiration or termination of this Agreement; (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Kidokinetics franchisees; or (v) solicit business from customers of Franchisee's former Kidokinetics Business or contact any of Franchisor's suppliers or vendors for any competitive business purpose.
  • 18.6. Reasonableness of Restrictions. Franchisee acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Franchisee or Principals, if any, since Franchisee or Principals, as the case may be, have other considerable skills, experience and education which afford Franchisee or Principals, as the case may be, the opportunity to derive income from other endeavors.

  • 18.7. Reduction of Time or Scope. If the period of time or the geographic scope specified above should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion of geographic scope, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable. In addition, Franchisor has the right, in its sole discretion, to reduce the scope of any covenant set forth in this Article 18 or any portion thereof, without Franchisee's consent, effective immediately upon receipt by Franchisee of written notice, and Franchisee agrees to immediately comply with any covenant as so modified.
  • 18.8.

Source: Item 22 — CONTRACTS (FDD page 59)

What This Means (2024 FDD)

According to Kidokinetics's 2024 Franchise Disclosure Document, the franchisee's spouse is restricted from interfering with the business of Kidokinetics or its franchisees. During the term of the agreement, the franchisee, any principals, and their spouses cannot directly or indirectly divert business to competitors, participate in a competing youth fitness business, perform any act injurious to the goodwill associated with the Kidokinetics brand, or interfere with the business of Kidokinetics or its franchisees.

These restrictions are in place to protect Kidokinetics's business interests, trade secrets, and confidential information. The agreement specifies that these individuals must not engage in activities that could harm the brand's reputation or disrupt the operations of the franchisor or other franchisees within the Kidokinetics system. This is a fairly standard practice in franchising, as franchisors typically want to prevent franchisees and related parties from using the franchisor's confidential information and systems to compete against them, both during the franchise term and for a reasonable period afterward.

After the agreement expires or terminates, or upon a transfer, these restrictions continue for 24 months. During this period, the franchisee, principals, and their spouses are prohibited from engaging in similar competitive activities within a 20-mile radius of the granted territory or any other territory licensed by Kidokinetics. This includes diverting business, participating in a competing business, or interfering with Kidokinetics's business or its franchisees. These measures are designed to prevent unfair competition and protect the Kidokinetics system's integrity even after the franchise relationship ends.

These non-compete covenants are acknowledged by Kidokinetics as fair and reasonable, considering that franchisees and principals possess other skills and experience that allow them to derive income from other endeavors. Franchisees and their spouses must also sign a Confidentiality and Non-Compete Agreement, further solidifying these obligations. This ensures that all parties understand and agree to the terms, which are intended to safeguard Kidokinetics's interests and maintain a level playing field within the franchise system.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.