factual

Which obligations of the Kidokinetics franchisee survive the termination or expiration of the agreement?

Kidokinetics Franchise · 2024 FDD

Answer from 2024 FDD Document

ration of this Agreement;

  • 17.1.4. promptly pay all sums owing to Franchisor and its affiliates. Such sums will include all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor as a result of any default by Franchisee. The payment obligation gives rise to and remains until paid in full, a lien in favor of Franchisor against any and all of the personal property, furnishings, equipment, fixtures and vehicles owned by Franchisee and used in the operation of the Kidokinetics Business at the time of default;
  • 17.1.5. pay to Franchisor all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor in connection with obtaining any remedy available to Franchisor for any violation of this Agreement and, subsequent to the termination or expiration of this Agreement, in obtaining injunctive or other relief for the enforcement of any provisions of this Agreement that survive its termination;
  • 17.1.6. immediately deliver to Franchisor the Franchise Operations Manual and all records, files, instructions, customer lists, correspondence, invoices, agreements and all other materials related to operation of the Kidokinetics Business (all of which are acknowledged to be Franchisor's property), and retain no copy or record of any of the foregoing, except Franchisee's copy of this Agreement and of any correspondence between the parties and any other documents that Franchisee reasonably needs for compliance with any provision of law;
  • 17.1.7. comply with the non-disclosure and non-competition covenants contained in Article 18; and
  • 17.1.8. Permit Franchisor to make a final inspection of Franchisee's financial records, books, and other accounting records within one (1) month of the effective date of termination, expiration, or transfer.

17.2. Right to Purchase.

  • 17.2.1. Franchisor has the option, but not the obligation, to be exercised within thirty (30) days after termination or expiration of this Agreement, to purchase from Franchisee any or all of the equipment (including any point-of-sale system or computer systems), vehicles, signs, fixtures, advertising materials and supplies of Franchisee related to the operation of the Kidokinetics Business, at Franchisee's cost or fair market value, whichever is less. Franchisor will purchase Franchisee's assets free and clear of any liens, charges, encumbrances or security interests and Franchisor will assume no liabilities whatsoever, unless otherwise agreed to in writing by the parties. If the parties cannot agree on the fair market value within thirty (30) days of Franchisor's exercise of its option, fair market value will be determined by two (2) appraisers, with each party selecting one (1) appraiser, and the average of their determinations will be binding. In the event of such appraisal, each party will bear its own legal and other costs and split the appraisal fees equally.

Source: Item 22 — CONTRACTS (FDD page 59)

What This Means (2024 FDD)

According to Kidokinetics' 2024 Franchise Disclosure Document, several obligations of the franchisee survive the termination or expiration of the franchise agreement. Any obligation of the franchisee that contemplates performance after the termination or expiration of the agreement is deemed to survive. This means that even after the franchise ends, certain duties and responsibilities continue to apply.

Specifically, the franchisee must promptly pay all sums owed to Kidokinetics and its affiliates, including damages, costs, and expenses, such as reasonable attorneys' fees, resulting from any default by the franchisee. This payment obligation creates a lien in favor of Kidokinetics against the franchisee's personal property used in the Kidokinetics business. The franchisee must also pay all damages, costs, and expenses, including attorneys' fees, incurred by Kidokinetics in obtaining remedies for violations of the agreement, even after termination.

Furthermore, the franchisee must comply with non-disclosure and non-competition covenants. This includes restrictions on operating a competing business within a 20-mile radius for 24 months after the agreement ends and prohibitions on using confidential information. The franchisee is also obligated to allow Kidokinetics to inspect their financial records within one month of the termination date. These survival clauses are designed to protect Kidokinetics' interests and ensure a smooth transition after a franchise agreement concludes.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.