Under what circumstances is the Kidokinetics Guaranty not discharged?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
The expiration, earlier termination or exercise of Franchisor's rights pursuant to Article 16 do not discharge or release Franchisee or any Principal from any liability or obligation then accrued, or any liability or obligation continuing beyond, or arising out of, the expiration, the earlier termination or the exercise of such rights under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, the expiration or earlier termination of the Franchise Agreement, or the exercise of Kidokinetics' rights under Article 16, does not automatically release the franchisee or any principal from liabilities or obligations. This means that even after the franchise agreement ends, either through its natural expiration or earlier termination, certain financial responsibilities and other duties may still apply to the franchisee and their principals. These ongoing obligations can include liabilities that have already accrued during the term of the agreement, as well as any responsibilities that extend beyond the termination date or arise as a result of the termination itself.
This provision ensures that Kidokinetics can pursue any outstanding debts, unfulfilled contractual duties, or other legal claims against the franchisee or their principals, even after the franchise relationship has ended. For example, if a franchisee owes unpaid royalties or has breached a non-compete clause, Kidokinetics can still take legal action to recover the owed amounts or enforce the non-compete agreement, regardless of whether the franchise agreement is still in effect. The personal guaranty signed by the franchisee ensures that these obligations are met, even if the franchise business itself is no longer operational or financially viable.
For a prospective Kidokinetics franchisee, this clause highlights the importance of understanding all the terms and conditions of the Franchise Agreement, particularly those related to termination and post-termination obligations. It is crucial to maintain accurate financial records, comply with all contractual requirements, and seek legal advice if there are any doubts about the scope of continuing liabilities. This clause also underscores the significance of the Personal Guaranty, as it holds the franchisee and their principals personally responsible for the franchise's debts and obligations, even after the business ceases to operate under the Kidokinetics brand.