Can Kidokinetics operate acquired businesses under different marks?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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's 2024 Franchise Disclosure Document, Kidokinetics retains the right to acquire, merge, or engage in joint ventures with other businesses, including those offering similar products, and to operate or franchise these businesses under different marks, both within and outside the franchisee's territory. This means that Kidokinetics can operate businesses, even those competing with existing franchisees, under brand names other than "Kidokinetics".
This reservation of rights also extends to Kidokinetics's ability to offer similar products and services under different marks, as well as through various distribution channels like virtual classes or telemarketing. The franchisee's agreement does not grant them the right to engage in e-commerce or establish websites using Kidokinetics's marks without prior approval. Furthermore, franchisees are restricted from selling products through channels like wholesale or internet sales.
Kidokinetics is not obligated to compensate the franchisee even if it exercises these rights within the franchisee's territory. This clause highlights the non-exclusive nature of the franchise agreement and the broad rights retained by Kidokinetics to operate and expand its business through various means, potentially including competing brands and distribution methods. Prospective franchisees should carefully consider these terms and how they might impact their business before investing in a Kidokinetics franchise.