Under what grounds can a Kidokinetics franchisee terminate the franchise agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement does not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
Item 17 of the FDD is amended to add the following:
Indiana Code 23-2-2.7-1(7) makes it unlawful for us to unilaterally terminate your Franchise Agreement unless there is a material violation of the Franchise Agreement and termination is not in bad faith.
With respect to Franchises governed by Minnesota law, we will comply with Minnesota Statute Section 80C.14, Subds. 3, 4 and 5, which require, except in certain specified cases, that you be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of the Franchise Agreement; and that consent to the transfer of the Franchise will not be unreasonably withheld.
California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning termination, transfer, or non-renewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the California Franchise Investment Law, the Californ
Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
Based on the 2024 Kidokinetics Franchise Disclosure Document, the grounds for a franchisee to terminate the franchise agreement are not explicitly detailed in the provided excerpts. However, the document includes addenda for certain states that address franchisee rights and franchisor restrictions regarding termination, transfer, and non-renewal. These addenda modify the franchise agreement to comply with state-specific laws, suggesting that the standard agreement might contain clauses that are unenforceable or require modification in those states.
For example, in Virginia, it is unlawful for Kidokinetics to cancel a franchise without reasonable cause, and any grounds for default or termination stated in the Franchise Agreement that do not constitute "reasonable cause" may not be enforceable. Similarly, in Indiana, Kidokinetics cannot unilaterally terminate the Franchise Agreement unless there is a material violation and the termination is not in bad faith. In Minnesota, franchisees must be given 90 days' notice of termination (with 60 days to cure) except in certain specified cases, and 180 days' notice for non-renewal of the Franchise Agreement.
In California, the Franchise Investment Law and the Franchise Relations Act provide rights to franchisees concerning termination, transfer, or non-renewal, and any provision inconsistent with these laws may not be enforceable. Additionally, the FDD mentions that California Corporations Code Section 31125 requires Kidokinetics to provide an approved FDD before asking a franchisee to consider a material modification of their Franchise Agreement. These state-specific provisions highlight the importance of franchisees understanding their rights under local laws, as the standard franchise agreement may be subject to modifications and limitations.
Given the lack of explicit details on termination grounds within the provided excerpts, it is crucial for prospective Kidokinetics franchisees to carefully review Item 17 of the FDD, which typically covers termination, renewal, transfer, and dispute resolution. They should also consult with a legal professional to understand how state laws may affect their rights and obligations under the franchise agreement. Specifically, franchisees should inquire about what constitutes "reasonable cause" for termination in their state and what remedies are available if Kidokinetics violates franchise laws.