Under what circumstances can Canine Dimensions require the franchisee to obtain execution of covenants from additional persons?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
At Franchisor's request, franchisee shall require and obtain execution of covenants similar to those set forth in this Section 16 (including covenants applicable upon the termination of a person's relationship with Franchisee) from any or all of the following persons: (1) All principals of Franchisee (if Franchisee is a corporate entity), all Associates of Franchisee, and any other personnel employed by Franchisee who have received or will receive training from Franchisor; and (2) all officers, directors, partners, managers, and holders of a beneficial interest of five percent (5%) or more of Franchisee, and of any corporate entity directly or indirectly controlling Franchisee, if Franchisee is a corporate entity. Every covenant required by this Section 16 shall be in a form satisfactory to Franchisor, including, without limitation, specific identification of Franchisor as a third party beneficiary of such covenants with the independent right to enforce them. Failure by Franchisee to obtain execution of a covenant required by this Section 16.9 will be a material default under Section 14.2.
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
According to Canine Dimensions's 2025 Franchise Disclosure Document, Canine Dimensions can request that franchisees obtain execution of covenants from additional persons under specific circumstances. These covenants are similar to those outlined in Section 16 of the franchise agreement, which include obligations that apply even after a person's relationship with the franchisee ends.
Canine Dimensions may require these covenants from (1) all principals and associates of the franchisee (if the franchisee is a corporate entity), as well as any personnel employed by the franchisee who receive training from Canine Dimensions. (2) all officers, directors, partners, managers, and holders of a beneficial interest of five percent (5%) or more of the franchisee, and of any corporate entity directly or indirectly controlling the franchisee, if the franchisee is a corporate entity.
The covenants must be in a form that satisfies Canine Dimensions, explicitly identifying Canine Dimensions as a third-party beneficiary with the independent right to enforce them. Failure to obtain these executed covenants constitutes a material default under Section 14.2 of the franchise agreement. This means that a franchisee's failure to comply with Canine Dimensions's request to obtain these covenants can lead to a breach of contract, potentially resulting in penalties or termination of the franchise agreement.