After termination of my Kidokinetics franchise, for how long am I prohibited from operating a competing business?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
identify a Kidokinetics business, whether now in existence or hereafter created.
- "Prohibited Activities" means any or all of the following: (i) owning, operating, or having any other interest (as an owner, partner, director, officer, employee, manager, consultant, shareholder, creditor, representative, agent, or in any similar capacity) in a Competitive Business (other than owning an interest of five percent (5%) or less in a publicly-traded company that is a Competitive Business); (ii) diverting or attempting to divert any business from us (or one of our affiliates or franchisees); and/or (iii) inducing or attempting to induce any customer of ours (or of one of our affiliates or franchisees) to transfer their business to you or to any other person that is not then a franchisee of ours.
- "Restricted Period" means the 24 months-year period after you cease to be a manager or officer of Franchisee's Kidokinetics business; provided, however, that if a court of competent jurisdiction determines that this period of time is too long to be enforceable, then the "Restricted Period" means the
12 months-year period after you cease to be a manager or officer of Franchisee's Kidokinetics business.
"Restricted Territory" means the geographic area within: (i) 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; provided, however, that if a court of competent jurisdiction determines that the foregoing Restricted Territory is too broad to be enforceable, then the "Restricted Territory" means the geographic area within a 10-mile radius from Franchisee's Kidokinetics business (and including the premises of the approved location of Franchisee).
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, if you are a manager or officer of a Kidokinetics franchise, you are restricted from engaging in "Prohibited Activities" for a period defined as the "Restricted Period". The standard Restricted Period lasts for 24 months after you cease being a manager or officer. These Prohibited Activities include owning, operating, or having any interest in a Competitive Business, diverting business from Kidokinetics, or inducing Kidokinetics customers to transfer their business to you or someone else who is not a Kidokinetics franchisee. An exception exists if you own an interest of five percent (5%) or less in a publicly-traded company that is a Competitive Business.
The document also states that the "Restricted Territory" is a geographic area within a twenty (20) mile radius of the perimeter of the territory granted to you, or any other territory licensed by Kidokinetics. However, if a court deems this too broad, the Restricted Territory shrinks to a 10-mile radius from the Kidokinetics business location. This means that after leaving Kidokinetics, you cannot operate a similar business within this defined area for the duration of the Restricted Period.
It is important to note that these restrictions may be subject to judicial review. If a court finds the 24-month period too long or the 20-mile radius too broad, the agreement specifies that the restrictions will be reduced to a shorter period or smaller radius to ensure enforceability. This highlights that the enforceability of non-compete clauses can vary depending on local laws and judicial interpretation. Therefore, a prospective franchisee should consult with a legal professional to understand the specific implications of these restrictions in their jurisdiction.