Can a Dog Haus Area Developer assign the agreement without restriction?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
en modifications that the Agreement as modified is in full force and effect and identifying the modifications); (b) that Franchisee is not in default under any provision of this Agreement, or if in default, describing the nature thereof in detail; and (c) as to such other matters as Franchisor may reasonably request; and Franchisee agrees that any such statements may be relied upon by Franchisor and any prospective purchaser, assignee or lender of Franchisor.
- 14.2 Assignment by Franchisee. Franchisee acknowledges and agrees that the rights granted to Franchisee under this Agreement are personal and are granted in reliance upon, among other considerations, the individual or collective character, skill, aptitude, attitude, experience, business ability and financial condition and capacity of Franchisee and, if Franchisee is an Entity, that of the Owners. Accordingly, to protect the Dog Haus System, the Dog Haus Marks, the Dog Haus Trade Secrets and the goodwill associated with the same, Franchisee shall not offer, sell, or negotiate the sale of its rights under this Agreement to any third party, either in Franchisee's own name or in the name and/or on behalf of Franchisor, except as otherwise provided in this Agreement. Franchisee acknowledges and agrees that Franchisee has no right, by operation of law or otherwise, to sell, assign, transfer, pledge, donate, encumber or otherwise deal with, directly or indirectly, (i) any interest in this Agreement; or (ii) the right to use the Dog Haus System or the Dog Haus Marks (an "Assignment") without Franchisor's prior written consent. Franchisor shall not unreasonably withhold its consent to an Assignment if, in Franchisor's judgment, Franchisee satisfies the conditions to the Assignment identified in this Agreement.
- 14.2.1 Unless the Parties otherwise agree in writing, Franchisee shall not make any Assignment of this Agreement except in conjunction with a concurrent Assignment to the same approved assignee of all Dog Haus Restaurants then owned and operated by Franchisee. As a condition to Franchisor's consent to an Assignment, the assignee must execute Franchisor's Then-Current form of Franchise Agreement for each Franchised Restaurant sold to the assignee. Further, without Franchisor's prior written consent, which may be withheld by Franchisor in its discretion, (i) Franchisee shall not offer for sale or transfer at public or private auction any of the rights of Franchisee under this Agreement; and (ii) Franchisee shall not, directly or indirectly, pledge, encumber, hypothecate or otherwise grant any third party a security interest in this Agreement in any manner whatsoever. To the extent that the foregoing prohibition may be ineffective under Applicable Law, Franchisee shall provide not less than ten (10) days' prior written notice (which notice shall contain the name and address of the secured party and the terms of the pledge, encumbrance, hypothecation or security interest) of any pledge, encumbrance, hypothecation or security interest in this Agreement.
- 14.2.2 For purposes of this Agreement, each of the following events is an Assignment subject to the conditions to transfer identified in this Agreement: (i) the death or incapacity of any Owner; (ii) the offer or sale of securities of Franchisee pursuant to a transaction subject to registration under applicable securities laws or by private placement pursuant to a written offering memorandum; (iii) the sale, assignment, transfer, conveyance, gift, pledge, mortgage, or other encumbrance of more than twenty percent (20%) in the aggregate, whether in one or more transactions, of the Equity or voting power of Franchisee, by operation of law or otherwise or any other events or transactions which, directly or indirectly, effectively changes control of Franchisee; (iv) the issuance of any securities by Franchisee which itself or in combination with any other transactions results in the Owners, as constituted on the Effective Date, owning less than fifty percent (50%) of the outstanding Equity or voting power of Franchisee; and (v) any merger, stock redemption, consolidation, reorganization, recapitalization or other transfer of control of the Franchisee, however effected. Franchisee shall promptly provide Franchisor with written notice (stating the information that Franchisor may from time to time require) of each and every transfer, assignment and encumbrance by any Owner of any direct or indirect equity or voting rights in Franchisee, notwithstanding that the same may not constitute an Assignment under this Article 14.
- 14.2.3 Neither Franchisor's right of first refusal nor the other conditions of Assignment shall apply to a transfer by Franchisee of all of Franchisee's rights under this Agreement to a newly-formed corporation, limited liability company or other business Entity provided all of the Equity or voting interests of the new business Entity are owned by the same Owners (a "Qualified Assignment"). Any attempted or purported Assignment which fails to comply with the requirements of this Article 14 shall be null and void and shall constitute a Default under this Agreement.
- 14.3. Right of First Refusal. Except with respect to a Qualified Assignment, if Franchisee or an Owner receive a bona fide written offer ("Third Party Offer") from a third party (the "Proposed Buyer") to purchase or otherwise acquire any interest in Franchisee which will result in an Assignment within the meaning of this Agreement, Franchisee or the Proposed Buyer shall, within fourteen (14) days after receiving the Third Party Offer and before accepting it, apply to Franchisor in writing for Franchisor's consent to the proposed Assignment. To constitute a bona fide written offer, the Third Party Offer must also apply to purchase or otherwise acquire all Dog Haus Restaurants then owned and operated by Franchisee, or its Affiliates.
- 14.3.1 Franchisee, or the Proposed Buyer, shall attach to its application for consent to complete the transfer a copy of the Third Party Offer together with (i) information relating to the proposed transferee's experience and qualifications; (ii) a copy of the proposed transferee's current financial statement; and (iii) any other information material to the Third Party Offer, proposed transferee and proposed Assignment or that Franchisor requests.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, an Area Developer cannot freely assign their agreement. The Area Developer needs prior written consent from Dog Haus to sell or transfer any interest in the Area Development Agreement or the rights to use the Dog Haus System or Marks. Dog Haus will not unreasonably withhold consent if the Area Developer meets the conditions for assignment outlined in the agreement.
Unless otherwise agreed to in writing, an Area Developer can only assign the Area Development Agreement if they also concurrently assign all Dog Haus Restaurants they own and operate in the Development Area to the same approved assignee. As a condition of consent, the assignee must execute Dog Haus's current form of Franchise Agreement for each Dog Haus Restaurant being sold.
Dog Haus outlines further conditions that must be met for an assignment to be approved. The Area Developer must be in good standing when consent is requested and up to the closing date of the assignment. The sales price cannot be so high that the buyer would be unlikely to meet their financial obligations to Dog Haus, third-party suppliers, and creditors. The buyer must also sign Dog Haus's current Area Development Agreement, which may have terms that differ from the original agreement and will supersede it. The Area Developer will remain subject to obligations that survive the transfer, such as those related to non-competition, non-interference, and non-disclosure of confidential information. Both the Area Developer and the proposed buyer must execute a general release in a form acceptable to Dog Haus.
The Area Developer is responsible for paying Dog Haus a transfer fee to cover administrative costs associated with processing the assignment. They must also transfer all necessary contracts to the buyer and obtain any required third-party consents. The buyer must execute all documents required by Dog Haus to complete the assignment. If the buyer is a business entity, any individual owning 20% or more of the equity or voting interests must execute a guarantee acceptable to Dog Haus. The Area Developer's right to receive sales proceeds from the buyer is subordinate to the buyer's obligations to Dog Haus and its affiliates. Unless the buyer is an existing franchisee, they and a managerial employee must complete Dog Haus's initial training program. Finally, the buyer must conform the Dog Haus Restaurants to Dog Haus's current appearance, design standards, and equipment specifications.