What representations and warranties must a Kidokinetics franchisee provide to the franchisor if the franchisor exercises its right of first refusal?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise or Other | Summary | |
|---|---|---|---|
| 1 TOVISION | Agreement | Summary | |
| 1. | Franchisor approval | Sections 15.2, 15.3 and | You may not transfer your interest in any of the items |
| 1. | 15.4 | listed in (k) above without our prior written consent. | |
| of transfer by | 13.4 | ilsted iii (k) above without our prior written consent. | |
| franchisee | 0 1 150 1154 | ||
| m. | Sections 15.3 and 15.4 | Conditions include: transferee meets our then-current | |
| franchisor's approval | standards for qualifying franchisees; transferee signs | ||
| of transfer | our then-current form of Franchise Agreement, which | ||
| may have materially different terms from your | |||
| Franchise Agreement; transferee and its Manager | |||
| successfully complete our Initial Management Training | |||
| Program; you have paid us and third- party creditors all | |||
| amounts owed; you and the transferee sign a General | |||
| Release in the form of Attachment C to the Franchise | |||
| Agreement; you subordinate any claims you have | |||
| against the transferee to us; we have approved the | |||
| material terms and conditions of the transfer and you | |||
| provide us a copy of the purchase agreement; you cure | |||
| all existing defaults; and you have paid us a transfer | |||
| fee, plus any actual costs, including broker fees, if | |||
| applicable. We may withhold or condition our consent | |||
| to any transfer as we deem appropriate based on the | |||
| circumstances of the transfer or otherwise. | |||
| n. | Franchisor's right of | Section 15.9 | You must promptly notify us of any written offer to |
| first refusal to acquire | purchase your Franchise. We have 30 days to exercise | ||
| franchisee's business | our first right to buy it on the same terms and | ||
| conditions, provided that (a) we may substitute cash for | |||
| any other consideration (b) our credit is deemed as | |||
| good as the proposed purchaser, (c) we have at least 60 | |||
| days to close and (d) you shall give us all customary | |||
| seller's representations and warranties. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, if a franchisee receives a written offer to purchase their franchise, they must promptly notify Kidokinetics. Kidokinetics then has 30 days to exercise its right to buy the franchise on the same terms and conditions as the offer. However, Kidokinetics has some flexibility in how it meets those terms.
Specifically, Kidokinetics can substitute cash for any other form of consideration offered by the proposed purchaser. Additionally, Kidokinetics's creditworthiness is automatically considered as good as the proposed purchaser's. Kidokinetics also gets at least 60 days to close the transaction.
Finally, the selling franchisee must provide Kidokinetics with all customary seller's representations and warranties. This means the franchisee must assure Kidokinetics that they have the legal right to sell the business, that the business's financial information is accurate, and that there are no hidden liabilities or legal issues. These representations and warranties protect Kidokinetics from unforeseen problems that could arise after the purchase.