After termination of my Kidokinetics franchise, what is the geographic radius within which I cannot operate a competing business?
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's 2024 Franchise Disclosure Document, for a period of 24 months after the termination of the franchise agreement, a franchisee and their principals are restricted from participating in a Competing Business within a 20-mile radius. This radius is measured from the perimeter of either the franchisee's granted territory or any other territory licensed by Kidokinetics as of the termination date. This restriction applies whether the franchisee is acting directly or indirectly, for themselves or in conjunction with any other person or entity.
This non-compete clause prevents franchisees from diverting business or customers from the Kidokinetics system to a competitor, engaging in activities that could harm the goodwill associated with Kidokinetics's marks and system, interfering with the business of Kidokinetics or its franchisees, or soliciting business from former Kidokinetics customers or suppliers. The agreement specifies that these restrictions are considered fair and reasonable, acknowledging that franchisees possess other skills and experiences that allow them to earn income from other sources.
However, the document also provides a contingency: if a court deems the 20-mile radius too broad to be enforceable, the restricted territory will be reduced to a 10-mile radius from the franchisee's Kidokinetics business location. This clause aims to balance the protection of Kidokinetics's interests with the franchisee's ability to pursue other business opportunities after leaving the franchise system. Prospective franchisees should be aware of these restrictions and consider their implications for future business ventures.