What are the consequences if a Dog Haus franchisee becomes insolvent?

According to Dog Haus's 2025 Franchise Disclosure Document, if a franchisee is deemed insolvent, it can lead to termination of the franchise agreement. Specifically, the franchise agreement can be terminated if the franchisee (i) is adjudicated insolvent or makes an assignment for the benefit of creditors; or (ii) applies for or consents to the appointment of a custodian, receiver, trustee or similar officer for it or for all or any substantial part of its property; or (iii) if such a custodian, receiver, trustee or similar officer is appointed without the application or consent of Franchisee, and such appointment continues undischarged for a period of sixty (60) days.

For a prospective Dog Haus franchisee, this means that maintaining financial solvency is critical to avoid losing the franchise. Insolvency can trigger immediate termination, resulting in the loss of the business and all associated investments. The franchisee must avoid scenarios such as assigning assets for the benefit of creditors or consenting to the appointment of a financial custodian.

Furthermore, even if a custodian, receiver, or trustee is appointed without the franchisee's consent, the franchisee has a limited window of sixty days to discharge the appointment to avoid termination. This underscores the importance of proactive financial management and seeking professional advice to address any financial difficulties promptly. The franchisee should also be aware of the conditions under which Dog Haus can terminate the franchise agreement to ensure compliance and mitigate the risk of default.