Under what condition are non-parties dismissed from litigation proceedings related to the Kidokinetics franchise agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
THE PARTIES MAY ONLY SEEK DAMAGES OR ANY REMEDY UNDER LAW OR EQUITY FOR ANY CLAIM AGAINST EACH OTHER OR THEIR SUCCESSORS, ASSIGNS OR GUARANTORS ARISING OUT OF OR RELATING TO THE AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES AND THE PARTIES AGREE THAT PRINCIPALS, AFFILIATES, SHAREHOLDERS, MEMBERS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES (THE "NON-PARTY"), UNLESS SUBJECT TO A PERSONAL GUARANTY, WILL NOT BE PERSONALLY LIABLE OR NAMED AS A PARTY IN ANY LITIGATION PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE RELATIONSHIP AMONG THE PARTIES.
IN THE EVENT A NON-PARTY IS NAMED IN ANY ACTION, THE PARTIES AGREE HEREIN THAT ANY CLAIMS AGAINST THE NON-PARTY WILL BE DISMISSED BY THE ARBITRATOR OR COURT WITH PREJUDICE UPON A MOTION TO DISMISS AND ALL COSTS OF LITIGATION INCURRED BY THE NON-PARTY, INCLUDING BUT NOT LIMITED TO ATTORNEYS FEES, WILL BE AWARDED TO THE NON-PARTY.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, there are specific conditions under which non-parties can be dismissed from litigation. The franchise agreement stipulates that principals, affiliates, shareholders, members, directors, officers, employees, agents, and representatives (collectively referred to as "non-parties") will not be held personally liable or named in any litigation arising from the franchise agreement or the relationship between the parties, unless they are subject to a personal guaranty.
If a non-party is named in a legal action, the agreement specifies that any claims against them will be dismissed with prejudice by the arbitrator or court. This dismissal is contingent upon a motion to dismiss being filed. Furthermore, the non-party is entitled to receive all litigation costs incurred, including attorney's fees, which will be awarded to them.
This provision offers significant protection to individuals and entities associated with the Kidokinetics franchisee but who are not direct parties to the franchise agreement. It ensures that litigation is focused on the actual parties to the agreement, streamlining legal proceedings and preventing unnecessary involvement of related individuals or entities. This clause could save non-parties considerable expense and time, as they can seek dismissal and recover costs if improperly named in a lawsuit.