Under what condition can Kidokinetics void a transfer made by the franchisee?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee's rights and duties under this Agreement are personal to Franchisee and/or Franchisee's Principal(s), and Franchisor has made this Agreement in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee and/or Franchisee's Principals.
Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval, which will not be unreasonably withheld.
Franchisor may void any transfer made without such approval.
- 15.3. Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Kidokinetics Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor, except as provided in Section 15.6 of this Agreement.
A transfer of any stock in the Franchisee if it is a corporation or a transfer of any ownership rights in Franchisee if it is a partnership, a limited liability company or limited partnership is a Transfer and is prohibited without prior written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics may void any transfer made by a franchisee without Kidokinetics's prior written approval. The document emphasizes that franchise rights and duties are personal to the franchisee, and Kidokinetics relies on its perception of the franchisee's character, skills, business ability, and financial capacity when granting the franchise. Therefore, any direct or indirect sale, assignment, transfer, or encumbrance of the agreement, the Kidokinetics business, or its assets requires prior written consent from Kidokinetics.
This restriction extends to transfers of stock in the franchisee's corporation or ownership rights in other business entities like partnerships or LLCs. Essentially, any change in ownership or control must be approved by Kidokinetics. This provision aims to ensure that the new owner or controlling party meets Kidokinetics's standards and is capable of maintaining the brand's quality and reputation.
For a prospective franchisee, this means that selling the franchise or transferring ownership isn't a simple transaction. It requires navigating Kidokinetics's approval process, which includes assessing the transferee's qualifications and ensuring compliance with the franchise agreement. Failing to obtain this approval can result in Kidokinetics voiding the transfer, potentially leading to legal and financial complications for the franchisee.