Can Kidokinetics merge with or be acquired by another entity, including competitors?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor.
- 2.2. Reservation of Rights. Franchisee acknowledges and agrees that Franchisor and any parties Franchisor designates will have the right to: (i) establish and operate, and license third parties the right to establish and operate, other franchised 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 Franchised 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 Franchised 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 Franchisee's Territory if contact with the customer is initiated by the customer and not Franchisor; (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 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, Kidokinetics retains the right to merge with or be acquired by another entity, even one that offers similar products. Specifically, Kidokinetics has the right to "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 Franchised Business, within or outside the Territory".
This clause in the franchise agreement means that Kidokinetics can consolidate with other businesses, including potential competitors, without needing the franchisee's consent. This is a standard practice in franchising, as it allows the franchisor to grow and adapt to market changes. However, it also carries implications for franchisees.
For a prospective Kidokinetics franchisee, this means that the competitive landscape could change if Kidokinetics merges with a competitor. While the franchisee's territory is protected, the overall brand and business strategy could shift. It is important to understand that the franchise agreement prioritizes the franchisor's ability to evolve the business model, even if it means partnering with entities that might be considered competitors. Franchisees should consider this potential for change when evaluating the long-term prospects of a Kidokinetics franchise.