After termination of my Kidokinetics franchise, for how long am I prohibited from 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, franchisees are subject to a covenant not to compete, which restricts their involvement in a competing business for a specified period after the termination of their franchise agreement. Specifically, upon termination of the agreement, the franchisee is prohibited from participating in a Competing Business for twenty-four months. This restriction applies within a twenty (20) mile radius of the perimeter of (a) the Territory or (b) any other Territory licensed by Kidokinetics as of the date of expiration or termination of this Agreement.
This non-compete clause prevents the franchisee from leveraging the knowledge and experience gained while operating a Kidokinetics franchise to directly compete with the brand. The clause aims to protect Kidokinetics's market share, customer relationships, and proprietary information. The agreement specifies that franchisees cannot act as an owner, partner, director, officer, employee, consultant, or agent in a Competing Business during this restricted period and within the specified geographic area.
The Kidokinetics agreement also states that the franchisee acknowledges the fairness and reasonableness of these restrictions, considering their other skills, experience, and education that allow them to derive income from other endeavors. This acknowledgement suggests that Kidokinetics believes the non-compete clause does not impose undue hardship on the franchisee. However, franchisees should carefully consider the implications of this clause and how it might affect their future business opportunities after leaving the Kidokinetics system.
It is important to note that these restrictions are designed to protect Kidokinetics's interests and the interests of its other franchisees by preventing unfair competition. Prospective franchisees should carefully review the non-compete provisions with legal counsel to fully understand their scope and potential impact on their future business activities.