After termination of my Kidokinetics franchise, what is the geographic restriction on participating in 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, after the termination of the franchise agreement, the franchisee and its principals are restricted from participating in a Competing Business. This restriction applies for 24 months and extends to a 20-mile radius from the perimeter of the granted territory or any other territory licensed by Kidokinetics as of the termination date.
This means that for two years following the end of the franchise agreement, a former Kidokinetics franchisee cannot be involved in a similar youth fitness business within that 20-mile radius. This includes being an owner, partner, director, officer, employee, consultant, or agent. The restriction aims to prevent franchisees from using the knowledge and experience gained during their time with Kidokinetics to unfairly compete against the brand.
However, 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 former Kidokinetics business location. This adjustment ensures the non-compete clause is reasonable and doesn't unduly restrict the franchisee's ability to earn a living. Franchisees should be aware of these restrictions and consider them carefully before signing the franchise agreement, as they could significantly impact their future business opportunities.
It is important to note that these restrictions are acknowledged by Kidokinetics as fair and reasonable, given that franchisees and principals are expected to have other skills, experience, and education that allow them to pursue income from other sources. This acknowledgement is part of the agreement, indicating that the franchisee understands and accepts the limitations on their ability to engage in a competing business after the franchise relationship ends.