Are there any exceptions to the rule that principals, affiliates, shareholders, members, directors, officers, employees, agents and representatives of Kidokinetics are not personally liable in litigation?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee further agrees that fulfillment of any and all of Franchisor's obligations written in the Franchise Agreement shall be Franchisor's sole responsibility and none of Franchisor's owners, officers, agents, representatives, nor any individuals associated with Franchisor shall be personally liable to Franchisee for any reason.
Nothing in this Franchise Agreement is intended, nor shall be deemed, to confer any rights or remedies upon any person or legal entity not a party to this Franchise Agreement; provided, however, that the additional insureds and the Indemnitees are intended third party beneficiaries under this Franchise Agreement with respect to indemnification obligations of Franchisee.
- 20.2. Successors.
This Agreement binds and inures to the benefit of the successors and assigns of Franchisor and is personally binding on and inures to the benefit of Franchisee (including the individuals executing this Agreement on behalf of an entity if Franchisee is an entity) and its or their respective heirs, executors, administrators and successors or assigns; provided, however, the foregoing provision will not be construed to allow a transfer of any interest of Franchisee or Principals, if any, in this Agreement or the Kidokinetics Business Location, except in accordance with Article 15 hereof.
- 20.3. Invalidity of Part of Agreement.
Should any provisions in this Agreement, for any reason, be declared by a court of competent jurisdiction to be invalid, then such provision will be invalid only to the extent of the prohibition without in any way invalidating or altering any other provision of this Agreement.
- 20.4. Entire Agreement.
This Agreement, including all attachments, is the entire agreement of the parties, superseding all prior written or oral agreements of the parties concerning the same subject matter, and superseding all prior written or oral representations made to Franchisee or any Principal, except the representations made in Franchisor's Franchise Disclosure Document.
Nothing contained in this Agreement or in any related agreement is intended to disclaim the representations Franchisor made in the Franchise Disclosure Document.
No agreement of any kind relating to the matters covered by this
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, while Kidokinetics states that its owners, officers, agents, and representatives are not typically personally liable to the franchisee, there are exceptions. Specifically, franchisees and their principals must indemnify and defend Kidokinetics and its affiliates against claims arising from the franchisee's business operations, advertising, use of trademarks, or infringement of intellectual property. This indemnification extends to damages, costs, and legal fees incurred by Kidokinetics.
This means that if a franchisee's actions lead to a lawsuit against Kidokinetics, the franchisee and their principals could be held personally responsible for covering the resulting costs. For example, if a franchisee's advertising contains false claims that lead to a lawsuit, the franchisee would have to cover Kidokinetics' legal expenses and any damages awarded. This obligation exists regardless of the insurance coverage Kidokinetics may have.
Furthermore, franchisees and their principals agree to covenants not to compete, both during the term of the agreement and for a period of twenty-four months after termination. These covenants restrict their ability to engage in any youth fitness business or any other business offering any other goods or services offered or authorized for sale by System franchisees within a specified radius. If these covenants are violated, the franchisee and their principals could face legal action and potential liability.
In the event of a transfer of the franchise, the franchisee and their principals are required to execute a general release of all claims against Kidokinetics and its officers, directors, shareholders, members, and employees. This release covers all known and unknown claims, including those arising from the Franchise Agreement or any federal, state, or local laws. This requirement ensures that Kidokinetics is protected from future litigation related to the transferred franchise.