Can Kidokinetics license third parties to operate other Kidokinetics Businesses outside of a franchisee's territory?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
stablishment.
As long as your Franchise Agreement is in effect, we will not establish, own or operate, or license others to establish, own or operate, any other Kidokinetics Business within your Territory. You are not granted any options, rights of first refusal or similar rights to acquire additional development rights or franchises anywhere, regardless of the proximity to your Kidokinetics Business.
We, and any party we designate, retains and will have the right to: (i) establish and operate, and license third parties the right to establish and operate, other Kidokinetics Businesses using the Marks and System at any location outside of the Territory; (ii) acquire, merge with, engage in joint ventures with, or otherwise affiliate with, and thereafter own and operate and franchise others the right to own and operate, any business of any kind, including businesses that offer products that are similar to those provided by a Kidokinetics Business, within or outside the Territory; (iii) open and operate, or license third parties the right to open or operate, businesses that offer products and services similar to the Kidokinetics Business under marks other than the Marks at any location; (iv) sell and distribute, directly or indirectly, or license others to sell and distribute, directly or indirectly, any products, services or merchandise, from any location or to any purchaser, through any channel or method of distribution (including, but not limited, to virtual classes, sales made by or through telemarketing, and/or on the Internet); (v) provide the services or sell products authorized for Kidokinetics Businesses to customers whose principal residence (or principal business office, if the customer is a business entity) is within a Kidokinetics franchisee's Territory if contact with the customer is initiated by the customer and not us; (vi) to use and license the use of technology to non-franchisee locations inside and outside the Territory; and (vii) engage in any other activities not expressly prohibited under this Agreement.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics retains the right to license third parties to establish and operate Kidokinetics Businesses outside of a franchisee's designated territory. The FDD specifies that Kidokinetics, or any party they designate, has the right to establish and operate, and license third parties to establish and operate, other Kidokinetics Businesses using the Kidokinetics marks and system at any location outside of the franchisee's territory. This means that while a franchisee is granted a territory, Kidokinetics is not restricted from allowing others to operate elsewhere.
This aspect of the franchise agreement is important for potential franchisees to understand. While franchisees are protected from other Kidokinetics businesses opening within their territory, they should be aware that Kidokinetics can license other businesses outside of their territory. This could potentially impact the franchisee if these other licensed businesses operate near the franchisee's territory or utilize marketing strategies that overlap with the franchisee's efforts.
Kidokinetics also retains the right to engage in various other activities, including acquiring or merging with other businesses (even those offering similar products), operating businesses under different trademarks, and selling products or services through various channels, all of which could occur both within and outside a franchisee's territory. These retained rights allow Kidokinetics to adapt to market changes and pursue various business opportunities, but franchisees should consider how these activities might affect their own Kidokinetics Business.
Furthermore, the Franchise Agreement does not grant franchisees any options, rights of first refusal, or similar rights to acquire additional development rights or franchises anywhere, regardless of proximity to their Kidokinetics Business. This means that franchisees do not have a guaranteed opportunity to expand their operations beyond their initial territory, as Kidokinetics maintains full discretion over future franchise locations and development.