In Michigan, can Kidokinetics refuse a transfer if the proposed transferee is a competitor?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- (g) A provision which permits us to refuse to permit a transfer of ownership of a Franchise, except for good cause. This subdivision does not prevent us from exercising a right of first refusal to purchase the Franchise. Good cause shall include, but is not limited to:
- (i) the failure of the proposed transferee to meet our then-current reasonable qualifications or standards.
- (ii) the fact that the proposed transferee is a competitor of us or our subfranchisor.
- (iii) the unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) your or proposed transferee's failure to pay any sums owing to us or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
- (i) the failure of the proposed transferee to meet our then-current reasonable qualifications or standards.
Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, if a franchisee in Michigan wants to transfer ownership of their franchise, Kidokinetics has the right to refuse the transfer under certain conditions. Specifically, Kidokinetics can refuse a transfer if the proposed transferee is a competitor of Kidokinetics or its subfranchisor.
This provision protects Kidokinetics from having its business strategies and operational methods fall into the hands of a competitor. It ensures that a competitor cannot gain access to Kidokinetics's proprietary information, customer base, or market strategies through the acquisition of an existing franchise.
Other reasons Kidokinetics can refuse a transfer in Michigan include if the proposed transferee fails to meet Kidokinetics's then-current reasonable qualifications or standards, if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, or if the franchisee or proposed transferee fails to pay any sums owing to Kidokinetics or to cure any default in the Franchise Agreement at the time of the proposed transfer. These stipulations are designed to maintain the quality and financial stability of the Kidokinetics franchise system.