Which rights and obligations of the parties survive the expiration or termination of the Kidokinetics Franchise Agreement?
Kidokinetics Franchise · 2024 FDDAnswer 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. If Franchisor elects to exercise its option to purchase, it will have the right to set off (i) all fees for any such independent appraiser due from Franchisee, (ii) all amounts due from Franchisee to Franchisor or any of its affiliates and (iii) any costs incurred in connection with any escrow arrangement (including reasonable legal fees), against any payment and will pay the remaining amount in cash. Closing of the purchase will take place no later than thirty (30) days after determination of the fair market value.
- 17.2.2. With respect to the options described in Sections 17.2.1, Franchisee must deliver to Franchisor in a form satisfactory to Franchisor, such warranties, deeds, releases of lien, bills of sale, assignments and such other documents and instruments that Franchisor deems necessary in order to perfect Franchisor's title and possession in and to the properties being purchased or assigned and to meet the requirements of all tax and government authorities. If, at the time of closing, Franchisee has not obtained all of these certificates and other documents, Franchisor may, in its sole discretion, place the purchase price in escrow pending issuance of any required certificates or documents.
- 17.2.3. Franchisor may assign any and all of its options in Section 17.2.1 to any other party, without the consent of Franchisee.
- 17.3. Assignment of Telephone Numbers. Franchisee, at the option of Franchisor, shall assign to Franchisor all rights to the telephone numbers of the Kidokinetics Business and any related business listings and execute all forms and documents required by Franchisor and any telephone company at any time, to transfer such service and numbers to Franchisor. Further, Franchisee shall assign to Franchisor any and all Internet listings, domain names, Internet advertising, websites, listings with search engines, electronic mail addresses or any other similar listing or usage related to the Kidokinetics Business.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, several obligations and rights survive the termination or expiration of the Franchise Agreement. Kidokinetics franchisees must promptly pay all sums owed to Kidokinetics and its affiliates, including damages, costs, expenses, and reasonable attorney's fees resulting from any default by the franchisee. This payment obligation remains until paid in full and creates a lien in favor of Kidokinetics against the franchisee's personal property used in the Kidokinetics business.
Kidokinetics franchisees must also pay all damages, costs, and expenses, including reasonable attorney's fees, incurred by Kidokinetics in obtaining remedies for violations of the agreement, even after termination or expiration, including injunctive relief. Franchisees are obligated to immediately deliver the Franchise Operations Manual and all related materials to Kidokinetics, retaining no copies except for their copy of the agreement and necessary legal compliance documents. Compliance with non-disclosure and non-competition covenants outlined in Article 18 is also required post-termination. Kidokinetics retains the right to inspect the franchisee's financial records within one month of termination or expiration.
Kidokinetics has the option to purchase the franchisee's equipment, vehicles, signs, advertising materials, and supplies within thirty days of termination or expiration, at the lesser of cost or fair market value. Franchisees must assign all rights to telephone numbers, Internet listings, domain names, and email addresses related to the Kidokinetics business to Kidokinetics, with Kidokinetics holding a power of attorney to complete the assignment even after termination. The rights and obligations outlined in Article 17, which includes these post-termination duties, explicitly survive the expiration or termination of the agreement. Any obligation of Franchisee that contemplates performance after termination or expiration of this Agreement are deemed to survive such termination, expiration or transfer.