What happens if the Kidokinetics franchisee does not meet the obligation to participate in the actual operation of the franchise business?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.4.3.
Franchisee fails, in Franchisor's sole discretion, to personally supervise day-to-day operation of the Kidokinetics Business or fails to employ a sufficient number of qualified, competent personnel as Franchisor requires from time to time.
- 16.4.4.
Franchisee fails to maintain the strict quality controls reasonably required by this Agreement and/or the Franchise Operations Manual.
- 16.4.5.
Franchisee conducts itself in a manner that, although not criminal, reflects adversely on the System, the Marks, or the services offered through the System.
- 16.4.6.
Franchisee fails to procure or maintain any licenses, certifications, or permits necessary for the operation of Franchisee's Kidokinetics Business.
- 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 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 39)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, if a franchisee fails to personally supervise the day-to-day operations of the Kidokinetics business or fails to employ a sufficient number of qualified personnel, Kidokinetics may consider the franchisee in default. Kidokinetics will provide a 15-day written notice to cure this default. If the franchisee does not rectify the situation within this period, Kidokinetics has the option to terminate the Franchise Agreement.
In the event of a default by the franchisee, Kidokinetics has the option to take action to correct the default at the franchisee's expense. Kidokinetics can also enter the Kidokinetics business location and take control of the business operations until they determine that the default has been resolved and the franchisee is complying with the agreement.
If Kidokinetics takes over the business operations, the franchisee is required to pay Kidokinetics 10% of the gross sales generated during the period Kidokinetics operates the business. This compensation is in addition to all other fees outlined in the Franchise Agreement. This provision ensures that Kidokinetics is compensated for its efforts in managing the business during the period of the franchisee's default.