Under what conditions will a Kidokinetics franchisee be deemed in default, leading to automatic termination without notice?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Default and Automatic Termination. Franchisee will be deemed to be in default under this Agreement, 16.1. and all rights granted herein will automatically terminate without notice to Franchisee, if Franchisee becomes insolvent or makes a general assignment for the benefit of creditors; or if Franchisee or any Principal files a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof, or admits in writing its inability to pay its debts when due; or if Franchisee or any Principal is adjudicated as bankrupt or insolvent in proceedings filed against Franchisee or any Principal under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state; or if a bill in equity or other proceeding for the appointment of a receiver of Franchisee or other custodian for Franchisee's business or assets is filed and consented to by Franchisee; or if a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if proceedings for a composition with creditors under any state or federal law should be instituted by or against Franchisee; or if a final judgment remains unsatisfied or of record for 30 days or longer (unless supersedeas bond is filed); or if Franchisee is dissolved; or if execution is levied against Franchisee's business or property; or if suit to foreclose any lien or mortgage against the Kidokinetics Business premises or equipment is instituted against Franchisee and not dismissed within 30 days.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, a franchisee can face automatic termination without notice under specific default conditions. These conditions primarily involve financial instability or legal issues that severely impact the franchisee's ability to operate the business.
Specifically, Kidokinetics will automatically terminate the franchise agreement if the franchisee becomes insolvent, makes an assignment for the benefit of creditors, files for bankruptcy, or admits in writing their inability to pay debts. Similarly, a bankruptcy adjudication against the franchisee or any principal also triggers automatic termination. The appointment of a receiver or custodian for the franchisee's business assets, or the institution of proceedings for composition with creditors, also leads to automatic termination.
Further conditions leading to automatic termination include an unsatisfied final judgment remaining of record for 30 days or longer (unless a supersedeas bond is filed), the dissolution of the franchise, execution levied against the franchisee's business or property, or the institution of a suit to foreclose any lien or mortgage against the Kidokinetics business premises or equipment that is not dismissed within 30 days. These stipulations highlight the critical importance of maintaining financial solvency and addressing legal challenges promptly to avoid immediate termination of the Kidokinetics franchise agreement.