Can Kidokinetics freely assign the Franchise Agreement to another entity?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
e Territory to a Kidokinetics franchise.
- 15.1.3. If Franchisor assigns its rights in this Agreement, nothing requires Franchisor to remain in the youth fitness business, or to offer or sell any products or services to Franchisee.
- 15.2. Restrictions on Transfers by Franchisee. Franchisee's rights and duties under this Agreement are personal to Franchisee and/or Franchisee's Principal(s), and Franchisor has made this Agreement in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee and/or Franchisee's Principals. Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval, which will not be unreasonably withheld. Franchisor may void any transfer made without such approval.
- 15.3. Transfers by Franchisee. Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Kidokinetics Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor, except as provided in Section 15.6 of this Agreement. A transfer of any stock in the Franchisee if it is a corporation or a transfer of any ownership rights in Franchisee if it is a partnership, a limited liability company or limited partnership is a Transfer and is prohibited without prior written consent of Franchisor. If Franchisee has complied fully with this Agreement, Franchisor will not unreasonably withhold its consent of a Transfer that meets the following requirements:
- 15.3.1. The proposed transferee must be an individual of good moral character or the principals of the transferee must all be of good moral character and otherwise meet Franchisor's then-applicable standards for franchisees;
- 15.3.2. The transferee must have sufficient business experience, aptitude and financial resources to operate the Kidokinetics Business and to comply with this Agreement;
- 15.3.3. The transferee and its or their Manager have agreed to complete Franchisor's Initial Management Training Program to Franchisor's satisfaction;
- 15.3.4.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, Kidokinetics has the right to assign its rights within the Franchise Agreement. If Kidokinetics assigns these rights, it is not obligated to remain in the youth fitness business or to continue offering or selling any products or services to the franchisee. This means that a new entity could take over the franchise system, potentially changing the direction or support provided to franchisees.
Conversely, the franchisee's ability to transfer their rights and duties under the Franchise Agreement is restricted. The document states that these rights are personal to the franchisee, and Kidokinetics has entered into the agreement based on their assessment of the franchisee's character, skills, and financial capacity. Therefore, a franchisee cannot freely transfer the agreement without Kidokinetics' prior written approval, which, however, will not be unreasonably withheld.
Specifically, the franchisee must seek approval from Kidokinetics for any transfer, including the sale, assignment, or conveyance of the agreement, the Kidokinetics business, or its assets. This also applies to transfers of stock or ownership rights in the franchisee's business entity. Kidokinetics will generally not withhold consent if the proposed transferee meets their standards for franchisees. However, Kidokinetics retains the right to withhold or condition consent based on the specific circumstances of the transfer.