What is the consequence if a Restricted Person violates the non-compete covenant of the Dog Haus franchise agreement?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.4 Violation of Covenants.
If Franchisee or any Restricted Person shall commit any violation of Section 15.3 during the two (2) year period following (i) the expiration or termination of this Agreement; (ii) the occurrence of any Assignment during the Term; (iii) the cession of the Restricted Person's relationship with Franchisee; or (iv) a final court order (after all appeals have been taken) with respect to any of the foregoing events or with respect to enforcement of Section 15.3, in addition to all other remedies available to Franchisor, Franchisee or the Restricted Person shall pay Franchisor, throughout the twenty-four (24) month period, five percent (5%) of the revenue derived by Franchisee from the sale of all products and services and all other income of every kind and nature ("Post Termination Gross Sales") of the Competitive Business.
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, if a franchisee or any restricted person violates the non-compete covenant within a specified period, Dog Haus has specific remedies. Specifically, if the violation occurs during the two-year period following the expiration or termination of the agreement, an assignment during the term, the end of the restricted person's relationship with the franchisee, or a final court order related to these events or enforcement of the non-compete, financial penalties will apply.
In addition to any other remedies available to Dog Haus, the franchisee or restricted person must pay Dog Haus 5% of the revenue derived from the sale of all products and services and all other income of every kind, which is defined as "Post Termination Gross Sales," of the competitive business throughout the twenty-four month period. This financial obligation serves as a direct consequence for violating the non-compete agreement.
This provision highlights the importance Dog Haus places on protecting its market position and confidential information. The financial penalty is designed to discourage franchisees and related parties from engaging in competitive activities that could harm the Dog Haus brand and business system. Prospective franchisees should carefully consider these post-termination obligations and the potential financial implications of operating a competitive business after their franchise agreement ends.