What is the role of the Franchisor, Kidokinetics Franchise LLC, in the 'Approval of Requested Assignment' agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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EXHIBIT H-5
KIDOKINETICS FRANCHISE
SAMPLE APPROVAL OF REQUESTED ASSIGNMENT
| This Approval of Requested Assignment ("Agreement") is entered into this day of, 20, between Kidokinetics Franchise LLC ("Franchisor"), a |
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| Florida limited liability company, ("Former Franchisee"), the |
| Florida limited liability company, ("Former Franchisee"), the undersigned owners of Former Franchisee ("Owners") and, a |
| [a/an Formation State] [corporation/limited liability company]"_("New Franchisee"). |
| RECITALS |
| WHEREAS, Franchisor and Former Franchisee entered into that certain franchise agreement dated, 20 ("Former Franchise Agreement"), in which |
| Franchisor granted Former Franchisee the right to operate a Kidokinetics franchise located at ("Franchised Business"); and |
| WHEREAS, Former Franchisee desires to assign ("Requested Assignment") the Franchised Business to New Franchisee, New Franchisee desires to accept the Requested Assignment of the Franchised Business from Former Franchisee, and Franchisor desires to approve the Requested Assignment of the Franchised Business from Former Franchisee to New Franchisee upon the terms and conditions contained in this Agreement, including that New Franchisee sign Franchisor's current form of franchise agreement together with all exhibits and attachments thereto ("New Franchise Agreement"), contemporaneously herewith. |
| NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements herein contained, the parties hereto hereby covenant, promise, and agree as follows: |
| 1. Payment of Fees . In consideration for the Requested Assignment, Former Franchisee acknowledges and agrees to pay Franchisor the Transfer Fee, as required under the Franchise Agreement (" Franchisor's Assignment Fee "). |
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- Assignment and Assumption. Former Franchisee hereby consents to assign all of its rights and delegate its duties with regard to the Former Franchise Agreement and all exhibits and attachments thereto from Former Franchisee to New Franchisee, subject to the terms and conditions of this Agreement, and conditioned upon New Franchisee's signing the New Franchise Agreement pursuant to Section 5 of this Agreement.
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- Consent to Requested Assignment of Franchised Business. Franchisor hereby consents to the Requested Assignment of the Franchised Business from Former Franchisee to New Franchisee upon receipt of the Franchisor's Assignment Fee from Former Franchisee and the mutual execution of this Agreement by all parties. Franchisor waives its right of first refusal set forth in the Former Franchise Agreement.
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- Termination of Rights to the Franchised Business. The parties acknowledge and agree that effective upon the date of this Agreement, the Former Franchise Agreement shall terminate and all of Former Franchisee's rights to operate the Franchised Business are terminated and that from the date of this Agreement only New Franchisee shall have the sole right to operate the Franchised Business under
the New Franchise Agreement. Former Franchisee and the undersigned Owners agree to comply with all of the covenants in the Former Franchise Agreement that expressly or by implication survive the termination, expiration, or transfer of the Former Franchise Agreement. Unless otherwise precluded by state law, Former Franchisee shall execute Franchisor's current form of General Release Agreement.
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- New Franchise Agreement. New Franchisee shall execute the New Franchise Agreement for the Franchised Business (as amended by the form of Addendum prescribed by Franchisor, if applicable), and any other required contracts for the operation of a Kidokinetics franchise as stated in Franchisor's Franchise Disclosure Document.
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- Former Franchisee's Contact Information. Former Franchisee agrees to keep Franchisor informed of its current address and telephone number at all times during the three-year period following the execution of this Agreement.
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- Acknowledgement by New Franchisee. New Franchisee acknowledges and agrees that the purchase of the rights to the Franchised Business ("Transaction") occurred solely between Former Franchisee and New Franchisee. New Franchisee also acknowledges and agrees that Franchisor played no role in the Transaction and that Franchisor's involvement was limited to the approval of Requested Assignment and any required actions regarding New Franchisee's signing of the New Franchise Agreement for the Franchised Business. New Franchisee agrees that any claims, disputes, or issues relating New Franchisee's acquisition of the Franchised Business from Franchisee are between New Franchisee and Former Franchisee, and shall not involve Franchisor.
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- Representation. Former Franchisee warrants and represents that it has not heretofore assigned, conveyed, or disposed of any interest in the Former Franchise Agreement or Franchised Business. New Franchisee hereby represents that it received Franchisor's Franchise Disclosure Document and did not sign the New Franchise Agreement or pay any money to Franchisor or its affiliate for a period of at least 14 calendar days after receipt of the Franchise Disclosure Document.
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- Notices. Any notices given under this Agreement shall be in writing, and if delivered by hand, or transmitted by U.S. certified mail, return receipt requested, postage prepaid, or via telegram or telefax, shall be deemed to have been given on the date so delivered or transmitted, if sent to the recipient at its address or telefax number appearing on the records of the sending party.
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- Further Actions.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics Franchise LLC plays a crucial role in the 'Approval of Requested Assignment' agreement when a franchisee wishes to transfer their franchise to a new owner. Kidokinetics, as the franchisor, must provide written approval for the transfer, ensuring that the material terms and conditions, including the price and payment terms, do not negatively impact the Kidokinetics business. However, Kidokinetics's approval does not act as a warranty or representation of the new franchisee's potential success.
Kidokinetics requires the existing franchisee to submit all proposed transfer documents for review at least 30 days before the transfer's closing. This allows Kidokinetics to assess the terms and conditions of the transfer. If the franchisee or any principal provides financing for the sale, these obligations must be subordinate to the new franchisee's obligations to Kidokinetics. The franchisee must also resolve any existing defaults under their agreements with Kidokinetics and ensure substantial compliance with these agreements during their terms.
Kidokinetics's consent to the assignment is contingent upon receiving the Franchisor's Assignment Fee from the former franchisee and the mutual execution of the agreement by all involved parties. Kidokinetics also waives its right of first refusal, allowing the transfer to proceed without the franchisor first having the option to purchase the franchise. Upon the agreement's effective date, the former franchisee's rights to operate the Kidokinetics business terminate, and only the new franchisee has the right to operate under a new franchise agreement. The former franchisee must also keep Kidokinetics informed of their contact information for three years following the agreement's execution.
Kidokinetics will not unreasonably withhold consent of a transfer if the franchisee has complied fully with the agreement and the transfer meets certain requirements. The proposed transferee must meet Kidokinetics's standards for franchisees, including demonstrating good moral character. The role of Kidokinetics in approving the assignment ensures that the transfer process is managed in a way that protects the Kidokinetics brand and system, while also setting clear expectations and obligations for all parties involved.