What is a 'Capital Event' in the context of the Dog Haus Area Development Agreement?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor and or its Affiliates may sell their assets, the Dog Haus Marks, or the Dog Haus System, may sell securities in a public offering or in a private placement, may merge, acquire other corporations, or be acquired by another corporation, and may undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial restructuring (collectively, a "Capital Event"), all without the consent or approval of Area Developer.
- 9.1.2 Upon the occurrence of a Capital Event, Franchisor shall have the right (the "Take-Along Right") to compel Area Developer to sell and, in such event, Area Developer shall sell the assets of any or all of the Dog Haus Restaurants, regardless of whether such Dog Haus Restaurants are under construction or are Open and operating (collectively the "Take-Along Assets") at the same value attributable to Dog Haus Restaurants owned and operated by Franchisor or its Affiliates at the closing of a Capital Event.
Franchisor shall exercise this Take-Along Right to compel the sale of the Take-Along Assets by Area Developer by providing Area Developer with written notice (the "Take-Along Notice") setting forth the time and place of the closing of the Capital Event, which time and place shall not be less than thirty (30) days after the date of the Take-Along Notice, and the expected price and form of consideration to be paid for the Take-Along Assets at the closing.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, a 'Capital Event' refers to specific actions that Dog Haus or its affiliates may undertake without needing the Area Developer's consent or approval. These events include selling assets, the Dog Haus Marks, or the Dog Haus System. Additionally, Dog Haus may sell securities through public offerings or private placements, merge with or acquire other corporations, or be acquired by another corporation. Furthermore, the brand may undergo refinancing, recapitalization, leveraged buy-outs, or other forms of economic or financial restructuring, all classified as 'Capital Events'.
In the event of a Capital Event, Dog Haus has a 'Take-Along Right,' allowing them to compel the Area Developer to sell the assets of any or all Dog Haus Restaurants, whether under construction or already operating. The sale price for these assets will be equivalent to the value attributed to Dog Haus Restaurants owned and operated by Dog Haus or its affiliates during the Capital Event's closing.
Dog Haus must provide the Area Developer with a written 'Take-Along Notice' at least thirty days before the Capital Event's closing. This notice will specify the time and place of the closing, along with the expected price and form of consideration for the assets. This clause ensures that while Dog Haus has the right to make significant changes to its business structure, the Area Developer is informed and included in related asset sales under specific conditions.