Upon expiration or termination of the Kidokinetics franchise agreement, will the franchisee receive any monetary amount attributable to goodwill?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.3 Goodwill.
Franchisee understands and agrees that any and all goodwill arising from Franchisee's use of the Intellectual Property and the System inures solely and exclusively to the benefit of Franchisor and Licensor, and upon expiration or termination of this Agreement and the license granted, no monetary amount will be assigned as attributable to any goodwill associated with Franchisee's use of the Intellectual Property.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees will not receive any monetary compensation for goodwill upon the expiration or termination of their franchise agreement. The FDD states that any goodwill arising from the franchisee's use of Kidokinetics's intellectual property and system exclusively benefits Kidokinetics and its licensor.
This means that when a Kidokinetics franchise agreement ends, the franchisee will not be paid for any value the business has built up in terms of customer loyalty, brand recognition, or reputation. This is a common practice in franchising, as the franchisor owns the brand and system, and the franchisee is essentially renting the right to use them.
Prospective Kidokinetics franchisees should be aware that building a successful business will primarily benefit the franchisor in the long term, as the franchisee will not be able to capitalize on the goodwill they create when the franchise agreement ends. This highlights the importance of understanding the terms of the franchise agreement and the potential limitations on the franchisee's ability to build long-term equity in the business.