What happens if execution is levied against a Kidokinetics franchisee's business or property?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.1.4. promptly pay all sums owing to Franchisor and its affiliates. Such sums will include all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor as a result of any default by Franchisee. The payment obligation gives rise to and remains until paid in full, a lien in favor of Franchisor against any and all of the personal property, furnishings, equipment, fixtures and vehicles owned by Franchisee and used in the operation of the Kidokinetics Business at the time of default;
- 17.1.5. pay to Franchisor all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor in connection with obtaining any remedy available to Franchisor for any violation of this Agreement and, subsequent to the termination or expiration of this Agreement, in obtaining injunctive or other relief for the enforcement of any provisions of this Agreement that survive its termination;
- 17.1.6. immediately deliver to Franchisor the Franchise Operations Manual and all records, files, instructions, customer lists, correspondence, invoices, agreements and all other materials related to operation of the Kidokinetics Business (all of which are acknowledged to be Franchisor's property), and retain no copy or record of any of the foregoing, except Franchisee's copy of this Agreement and of any correspondence between the parties and any other documents that Franchisee reasonably needs for compliance with any provision of law;
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
Based on the 2024 Kidokinetics Franchise Disclosure Document, if a franchisee defaults on their agreement, they are obligated to promptly pay all sums owed to Kidokinetics and its affiliates. This includes all damages, costs, and expenses, including reasonable attorneys' fees, incurred by Kidokinetics as a result of the franchisee's default. To ensure this payment, Kidokinetics retains a lien against any and all personal property, furnishings, equipment, fixtures, and vehicles owned by the franchisee and used in the operation of the Kidokinetics business at the time of default.
This means that if a franchisee fails to meet their financial obligations to Kidokinetics, the franchisor has the right to claim the franchisee's business assets to cover the outstanding debt. This could significantly impact the franchisee's ability to continue operating the business, as essential assets could be seized to satisfy the debt. The lien provides Kidokinetics with a secured interest in the franchisee's assets, giving them priority over other creditors in recovering the debt.
Furthermore, upon termination or expiration of the franchise agreement, the franchisee is required to deliver to Kidokinetics the Franchise Operations Manual, all records, files, instructions, customer lists, correspondence, invoices, agreements, and all other materials related to the operation of the Kidokinetics business. These items are acknowledged to be Kidokinetics' property, and the franchisee must not retain any copies, except for their copy of the Franchise Agreement, correspondence between the parties, and documents needed for legal compliance. This obligation ensures that Kidokinetics retains control over its proprietary information and business operations, even after the franchise relationship ends.