Does the non-compete agreement with Kidokinetics prevent me from diverting customers to a competitor after the termination of my association with the Kidokinetics business?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- b. In further consideration for the disclosure to Covenantor of the Confidential Information and to protect the goodwill and unique qualities of the System, Covenantor further agrees and covenants that, upon the termination of Covenantor's association with the Kidokinetics Business and continuing for twenty-four months, Covenantor shall not, for Covenantor or through, on behalf of or in conjunction with any person or entity:
- (i) divert, or attempt to divert, any business or customer of the Kidokinetics Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise;
- (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in Competing Business within a twenty (20) mile radius of the perimeter of (a) the Territory or (b) any other Territory licensed by Franchisor as of the date of expiration or termination of this Agreement;
- (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Franchisor's Marks and the System;
- (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of any Kidokinetics franchisees; or
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the non-compete agreement does address the diversion of customers to a competitor after termination of the franchise agreement. Specifically, for a period of 24 months after termination, a franchisee cannot divert or attempt to divert any business or customer of the Kidokinetics Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise. This restriction is designed to protect the goodwill and unique qualities of the Kidokinetics system.
In addition to the restriction on diverting customers, the franchisee is also prohibited from participating in a Competing Business within a 20-mile radius of the perimeter of (a) the Territory or (b) any other Territory licensed by Franchisor as of the date of expiration or termination of this Agreement. They also cannot perform any act injurious or prejudicial to the goodwill associated with the Franchisor's Marks and the System, interfere with the business of any Kidokinetics franchisees, or solicit business from customers of Franchisee's former Kidokinetics Business or contact any of Franchisor's suppliers or vendors for any competitive business purpose.
The Kidokinetics FDD states that these covenants are considered fair and reasonable, as the franchisee is acknowledged to possess other skills, experience, and education that allow them to derive income from other endeavors. This suggests that while the non-compete agreement places restrictions on the franchisee's activities after termination, it is not intended to impose undue hardship.