After the Dog Haus Area Development Agreement expires, which covenants remain enforceable?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
13.8 Breach of Covenants Causes Irreparable Injury. Area Developer acknowledges that the violation of any covenant in this Article 13 would result in irreparable injury to Franchisor for which no adequate remedy at law may be available, and Area Developer consents to the issuance of, and agrees to pay all court costs and reasonable attorneys' fees incurred by Franchisor in obtaining, without the posting of any bond, an ex parte or other order for injunctive or other legal or equitable relief with respect to such conduct or action.
- 13.9 Effect of Applicable Law. In the event any portion of the covenants in this Article 13 violates laws affecting Area Developer, or is held invalid or unenforceable in a final judgment to which Franchisor and Area Developer are parties, then the maximum legally allowable restriction permitted by Applicable Law shall control and bind Area Developer. The provisions of this Article 13 shall be in addition to and not in lieu of any other confidentiality obligation of Area Developer, or any other person, whether pursuant to another agreement or pursuant to Applicable Law.
- 13.10 Survival. The provisions of this Article 13 shall survive the expiration and termination of this Agreement and shall not limit, restrain or otherwise affect any right or cause of action which may accrue to Franchisor for any infringement of, violation of, or interference with, this Agreement, or the Dog Haus Marks, the Dog Haus System, the Dog Haus Confidential Information, the Dog Haus Trade Secrets, or any other proprietary aspects of Franchisor's business.
14. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
- 14.1 No Fiduciary Relationship. This Agreement does not create a fiduciary relationship between the Parties. Area Developer shall be an independent contractor, and nothing in this Agreement is intended to constitute or appoint either Party an agent, legal representative, subsidiary, joint venturer, partner, employee, or servant of the other for any purpose whatsoever.
- Public Notice of Independent Status. Area Developer shall conspicuously identify itself in all dealings with its customers, contractors, suppliers, public officials, and others, as an independent Area Developer of Franchisor, and shall place such notice of independent ownership on all forms. Franchisor shall have the right to specify the language of any such notice.
- 14.3 Independent Contractor. Area Developer acknowledges and agrees that it is not authorized to make any contract, agreement, warranty, or representation on Franchisor's behalf, or to incur any debt or other obligations in Franchisor's name, and that Franchisor shall in no event assume liability for, or be deemed liable under this Agreement as a result of, any such action, nor shall Franchisor be liable by reason of any act or omission of Area Developer in its conduct of the operation of the Dog Haus Restaurants or for any claim or judgment arising therefrom against Area Developer or Franchisor.
- 14.4 Indemnification.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, several covenants remain in effect even after the Area Development Agreement expires or is terminated. Specifically, Article 13 of the agreement, which contains various covenants, survives the expiration or termination of the agreement. This means that the obligations and restrictions outlined in Article 13 continue to bind the Area Developer even after the agreement itself has ended.
One key aspect of these surviving covenants relates to non-competition. For a period of two years after the agreement's expiration, termination, or certain other triggering events like an assignment, the Area Developer and each Owner are restricted from owning, engaging in, or providing services to any Competitive Business. This restriction applies to businesses located at a "Franchised Location" (as defined in a Franchise Agreement with Dog Haus) or within a two-mile radius of any Dog Haus Restaurant or Franchised Location. However, these non-compete restrictions do not apply to an Owner after two years from the date they cease to be associated with the Area Developer in the Development Area. There is also an exception for ownership of less than 5% of the equity securities of a Competitive Business registered under certain securities laws.
Dog Haus emphasizes the importance of these covenants by stating that any violation would result in irreparable injury to the company. As a result, Dog Haus is entitled to seek injunctive relief to enforce these covenants, and the Area Developer agrees to pay all associated court costs and attorneys' fees. This underscores the seriousness with which Dog Haus views these post-termination obligations and the potential legal ramifications for non-compliance.
For a prospective Dog Haus franchisee, this means that even after the Area Development Agreement concludes, certain obligations, particularly those related to non-competition, will continue to apply. It is crucial to understand the scope and duration of these covenants to avoid any potential legal issues or conflicts of interest after the agreement's term. Franchisees should carefully review Article 13 of the Area Development Agreement and seek legal counsel to fully understand their post-termination obligations.