Under what circumstances can Kidokinetics terminate the franchise agreement with cause?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section In the Franchise or Other Agreement | Summary |
|---|---|---|
| f. Termination by Franchisor with cause | Article 16 | We may terminate if you default for failure to comply with the obligations of the Franchise Agreement, or if you or an affiliate of yours defaults under any other agreement, including any other franchise agreement, with us or any of our affiliates, suppliers or landlord and do not cure the default within the time period provided in the other agreement. The Franchise Agreement describes defaults throughout. Please read it carefully. |
| g. "Cause" defined- | Sections 16.3 and 16.4 | You have five days to cure non-payments. You have 15 days to cure the following defaults: your failure to immediately endorse payments that are erroneously made to you; your failure to maintain prescribed days and hours of operations; your failure to personally supervise day-to-day operations; your failure to maintain the strict quality controls reasonably required by the Franchise Agreement and/or the Franchise Operations Manuals; and your failure to obtain or maintain any required licenses, certifications or permits. |
| curable defaults | ||
| h. "Cause" defined -non-curable defaults | Sections 16.1 and 16.2 | The Franchise Agreement will terminate automatically, without notice for the following defaults: insolvency; bankruptcy; written admission of inability to pay debts; receivership; levy; composition with creditors; unsatisfied final judgment for more than 30 days; or foreclosure proceeding that is not dismissed within 30 days. We may terminate the Franchise Agreement upon notice to you if you: fail to open the Kidokinetics Business within required time frames; falsify any report to us; abandon the Kidokinetics Business for five days or more, unless the premises are damaged and you apply to relocate; lose possession of the vehicles and equipment, unless as a result of a casualty event; fail to re-open the Kidokinetics Business within 120 days after a casualty; fail to comply with applicable laws; default under any lease for the premises; understate Gross Sales by 3% at any time or understate Gross Sales by any amount three or more times; attempt a transfer in violation of the Franchise Agreement; fail, or your legal representative fails to transfer as required upon your death or permanent disability; misrepresent or omit a |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics can terminate the franchise agreement with cause if a franchisee fails to comply with the obligations outlined in the Franchise Agreement or defaults under any agreement with Kidokinetics, its affiliates, suppliers, or landlord. The termination can occur if the franchisee does not correct the default within the specified time frame provided in the agreement.
There are two categories of defaults that can lead to termination: curable and non-curable. For curable defaults, Kidokinetics provides a specific timeframe for the franchisee to rectify the issue. For instance, a franchisee has five days to cure non-payments. They have 15 days to correct defaults such as failing to endorse payments made erroneously to them, not maintaining prescribed operating hours, neglecting personal supervision of daily operations, failing to maintain strict quality controls, or not obtaining required licenses and permits.
Non-curable defaults, on the other hand, result in automatic termination of the Franchise Agreement without notice. These include situations such as insolvency, bankruptcy, admitting inability to pay debts, receivership, levy, composition with creditors, an unsatisfied final judgment for more than 30 days, or a foreclosure proceeding not dismissed within 30 days. Kidokinetics may also terminate the agreement with notice if the franchisee fails to open the Kidokinetics Business within the required time, falsifies reports, abandons the business for five or more days (unless due to premises damage with relocation application), loses possession of vehicles and equipment (unless due to a casualty event), fails to reopen after a casualty within 120 days, violates applicable laws, defaults on the premises lease, understates Gross Sales by 3% at any time or understates Gross Sales by any amount three or more times, attempts an unauthorized transfer, or fails to transfer the business as required upon death or permanent disability, or misrepresents or omits information.