What happens if a Kidokinetics franchisee fails to maintain sufficient working capital?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee will, at all times, maintain sufficient working capital to fulfill its obligations under this Agreement; and
- 11.1.16. At all times, maintain such working capital as may be reasonably necessary to enable Franchisee to properly and fully carry out and perform all of Franchisee's duties, obligations and responsibilities hereunder and to operate the Kidokinetics Business in a businesslike, proper and efficient manner; and
- 16.5. Upon 30 Days' Notice to Cure.
Franchisee shall be deemed to be in default and Franchisor has the right to terminate this Agreement if Franchisee fails to perform or comply with any one or more of the terms or conditions of this Agreement or any ancillary agreements between Franchisee and Franchisor or Franchisor's affiliates and fails to cure such default after notice and expiration of the thirty (30)-day cure period.
- 16.6. Franchisor's Cure of Franchisee's Defaults.
In the event of a default by Franchisee, in addition to Franchisor's right to terminate the Franchise Agreement, Franchisor may, but has no obligation to:
16.6.1. effect a cure on Franchisee's behalf and at Franchisee's expense, and Franchisee shall immediately pay Franchisor the costs incurred by Franchisor upon demand; or
16.6.2. enter upon the Kidokinetics Business Location and exercise complete authority with respect to the operation of the Kidokinetics Business until such time as Franchisor determines that the default of Franchisee has been cured and that Franchisee is complying with the requirements of this Agreement.
Franchisee specifically agrees that a designated representative of Franchisor may take over, control and operate the Kidokinetics Business.
In addition to all other fees paid under this Agreement, Franchisee shall pay Franchisor ten (10%) percent of the Gross Sales generated by the Kidokinetics Business during Franchisor's operation of the Kidokinetics Business, as compensation.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees must maintain sufficient working capital to meet their obligations under the Franchise Agreement. Specifically, franchisees must maintain enough capital to properly and fully carry out their duties, obligations, and responsibilities, and to operate the Kidokinetics business in a businesslike, proper, and efficient manner.
Failure to maintain sufficient working capital constitutes a breach of the Franchise Agreement. Item 16.5 states that Kidokinetics has the right to terminate the Franchise Agreement if a franchisee fails to comply with any terms or conditions of the agreement and fails to cure such default after notice and expiration of a thirty (30)-day cure period.
In the event of a default by the franchisee, Kidokinetics also has the option to effect a cure on the franchisee's behalf at the franchisee's expense, or to enter the Kidokinetics Business location and exercise complete authority over the business's operation until the default is cured. If Kidokinetics operates the business, the franchisee must pay Kidokinetics ten (10%) percent of the Gross Sales generated by the Kidokinetics Business as compensation, in addition to all other fees paid under the agreement.