What is the role of the 'Owners' in relation to the Former Franchisee in the Kidokinetics agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to the 2024 Kidokinetics Franchise Disclosure Document, in the context of an assignment and assumption agreement, the 'Owners' of the Former Franchisee have specific obligations. The Former Franchisee and their Owners must comply with all covenants in the Former Franchise Agreement that survive termination, expiration, or transfer. This means that even after the franchise changes hands, certain obligations of the original agreement remain in effect for both the Former Franchisee and their Owners. These obligations could include maintaining confidentiality, non-compete clauses, or other stipulations designed to protect Kidokinetics' interests.
This requirement ensures that the transfer of a Kidokinetics franchise does not release the Former Franchisee and their Owners from responsibilities that are intended to extend beyond the term of their operation. For example, if the Former Franchise Agreement contains a clause preventing competition within a certain radius for a specified time after termination, the Owners would also be bound by this restriction. This is a common practice in franchising to safeguard the brand and prevent former franchisees from leveraging their knowledge to directly compete with the franchised business.
Prospective Kidokinetics franchisees should carefully review the Former Franchise Agreement to understand which covenants survive termination and the specific obligations that will apply to the Former Franchisee's Owners. This is particularly important if the franchisee is purchasing an existing Kidokinetics location, as they will want to ensure that the Former Franchisee and their Owners are fully aware of their continuing responsibilities. Understanding these obligations is crucial for both the seller and the buyer to ensure a smooth transition and avoid potential legal issues down the line.