If a Kidokinetics franchisee defaults under any agreement with the franchisor's affiliates, can the franchise agreement be terminated?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section In the Franchise or Other Agreement | Summary |
|---|---|---|
| f. Termination by Franchisor with cause | Article 16 | We may terminate if you default for failure to comply with the obligations of the Franchise Agreement, or if you or an affiliate of yours defaults under any other agreement, including any other franchise agreement, with us or any of our affiliates, suppliers or landlord and do not cure the default within the time period provided in the other agreement. The Franchise Agreement describes defaults throughout. Please read it carefully. |
| g. "Cause" defined- | Sections 16.3 and 16.4 | You have five days to cure non-payments. You have 15 days to cure the following defaults: your failure to immediately endorse payments that are erroneously made to you; your failure to maintain prescribed days and hours of operations; your failure to personally supervise day-to-day operations; your failure to maintain the strict quality controls reasonably required by the Franchise Agreement and/or the Franchise Operations Manuals; and your failure to obtain or maintain any required licenses, certifications or permits. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the franchise agreement can be terminated if a franchisee or their affiliate defaults under any agreement with Kidokinetics or its affiliates, suppliers, or landlord. However, the franchisee has an opportunity to cure the default within the time period provided in the other agreement. This means that if a Kidokinetics franchisee has, for example, a lease agreement with an affiliate of Kidokinetics and defaults on that lease, Kidokinetics has the right to terminate the franchise agreement if the default is not cured within the timeframe specified in the lease agreement.
This provision is fairly standard in franchising, as franchisors want to ensure that their franchisees (and their affiliates) meet all financial obligations to protect the brand's reputation and the relationships with key suppliers and landlords. It's important for prospective Kidokinetics franchisees to carefully review all agreements they may have with Kidokinetics or its affiliates, suppliers, or landlords, and understand the default and cure provisions in each agreement.
The FDD specifies cure periods for some defaults. For instance, a Kidokinetics franchisee has five days to cure non-payments and 15 days to cure defaults such as failure to endorse payments, maintain operating hours, supervise operations, maintain quality controls, or obtain required licenses. However, the cure period for defaults under agreements with affiliates, suppliers, or landlords will be governed by the terms of those specific agreements, which may differ from the cure periods outlined in the Franchise Agreement itself.
Prospective Kidokinetics franchisees should pay close attention to Article 16 of the Franchise Agreement, as referenced in the FDD, which describes defaults throughout the agreement. Understanding what constitutes a default and the associated cure periods is crucial for maintaining a healthy relationship with Kidokinetics and avoiding potential termination of the franchise agreement.