Is inducing customers to transfer their business away from Kidokinetics franchisees considered a 'Prohibited Activity' according to the System Protection Agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Prohibited Activities" means any or all of the following: (i) owning, operating, or having any other interest (as an owner, partner, director, officer, employee, manager, consultant, shareholder, creditor, representative, agent, or in any similar capacity) in a Competitive Business (other than owning an interest of five percent (5%) or less in a publicly-traded company that is a Competitive Business); (ii) diverting or attempting to divert any business from us (or one of our affiliates or franchisees); and/or (iii) inducing or attempting to induce any customer of ours (or of one of our affiliates or franchisees) to transfer their business to you or to any other person that is not then a franchisee of ours.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, inducing or attempting to induce any customer of Kidokinetics or its affiliates or franchisees to transfer their business to another person who is not a Kidokinetics franchisee is considered a 'Prohibited Activity'.
This means that as a Kidokinetics franchisee, you are prohibited from actively encouraging or persuading customers of the Kidokinetics system to move their business to a different provider who is not part of the Kidokinetics franchise network. This restriction is designed to protect the integrity of the Kidokinetics brand and the customer base of existing franchisees.
The definition of "Prohibited Activities" includes not only diverting business from Kidokinetics itself but also from other franchisees within the system. This clause aims to prevent franchisees from undermining each other's businesses and ensures fair competition within the Kidokinetics franchise network. This restriction applies to managers or officers of the Kidokinetics business.
This measure is in place to maintain the stability and goodwill of the Kidokinetics system, ensuring that franchisees operate ethically and do not actively seek to take customers away from other franchisees within the network. Prospective franchisees should understand these restrictions and ensure they are comfortable operating within these guidelines to avoid potential breaches of the franchise agreement.