During the term of the Kidokinetics agreement, can a franchisee's spouse participate in a competing youth fitness business?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
In consideration for such specialized training, trade secrets, Confidential Information and rights, Franchisee and each Principal, if any, covenant that, except as otherwise approved in writing by Franchisor:
- 18.5.1.
During the term of this Agreement, Franchisee, each Principal, and the spouse of Franchisee and each Principal if any, shall not, either directly or indirectly, for themselves or through, on behalf of, or in conjunction with, any person or entity: (i) divert, or attempt to divert, any business or customer of the Kidokinetics Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any youth fitness business or any other business offering any other goods or services offered or authorized for sale by System franchisees ("Competing Business"); (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Kidokinetics franchisees.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, during the term of the franchise agreement, the franchisee's spouse is restricted from participating in a competing youth fitness business. Specifically, the franchisee, any principals, and their spouses are prohibited from engaging in any capacity with a "Competing Business," which is defined as any youth fitness business or any business offering goods or services that Kidokinetics franchisees are authorized to sell. This restriction applies unless the franchisor provides written approval otherwise.
This non-compete obligation extends to prevent the franchisee's spouse from acting as an owner, partner, director, officer, employee, consultant, or agent in a competing business. The restriction aims to protect Kidokinetics's market position and goodwill by preventing those closely associated with the franchisee from directly or indirectly supporting a competing venture. This measure is in place to ensure that confidential information and business strategies are not shared or used to benefit rival businesses during the term of the franchise agreement.
After the termination or transfer of the Kidokinetics franchise agreement, the non-compete restrictions continue for 24 months. During this period, the franchisee, principals, and their spouses are prohibited from participating in a Competing Business within a 20-mile radius of the original territory or any other territory licensed by Kidokinetics as of the termination date. This extended restriction further safeguards Kidokinetics's interests by preventing former franchisees and their families from immediately establishing or joining a competing business in close proximity to existing Kidokinetics locations.