After termination of my Kidokinetics franchise, am I allowed to contact Kidokinetics' suppliers for competitive business purposes?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.5.2.
Upon the expiration or earlier termination of this Agreement, or upon a Transfer and continuing for 24 months, Franchisee and Principals, 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 Competing Business within a twenty (20) mile radius of the perimeter of (a) the Territory being granted hereunder, or (b) any other Territory licensed by Franchisor as of the date of expiration or termination of this Agreement; (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Kidokinetics franchisees; or (v) solicit business from customers of Franchisee's former Kidokinetics Business or contact any of Franchisor's suppliers or vendors for any competitive business purpose.
- 18.6.
Reasonableness of Restrictions.
Franchisee acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Franchisee or Principals, if any, since Franchisee or Principals, as the case may be, have other considerable skills, experience and education which afford Franchisee or Principals, as the case may be, the opportunity to derive income from other endeavors.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, after the termination of the franchise agreement, there are restrictions regarding contacting Kidokinetics' suppliers. Specifically, for 24 months after the termination of the agreement, the franchisee is prohibited from contacting any of Kidokinetics' suppliers or vendors for any competitive business purpose. This restriction applies to both the franchisee and their principals, as well as their spouses.
This means that as a former Kidokinetics franchisee, you cannot reach out to suppliers that Kidokinetics uses to source products or services in order to start a competing business. This is a fairly standard clause in franchise agreements, designed to protect the franchisor's established relationships and supply chain.
The FDD also states that the franchisee acknowledges these non-compete covenants are fair and reasonable, considering they have other skills and experience to derive income from other endeavors. This suggests that Kidokinetics believes the restrictions will not cause undue hardship, as franchisees have alternative ways to earn a living. Franchisees should carefully consider this clause and how it might impact their future business opportunities should they decide to leave the Kidokinetics system.