What constitutes a 'Default' under the Dog Haus franchise agreement?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
Area Developer shall be in Default under this Agreement, and Franchisor may, at its option, terminate this Agreement and all rights granted under this Agreement, without affording Area Developer any opportunity to cure the Default, effective immediately upon receipt of notice by Area Developer (i) if Area Developer or an Owner is convicted of a felony, a crime involving moral turpitude, or any other crime or offense that Franchisor believes is reasonably likely to have an adverse effect on the Dog Haus System, the Dog Haus Marks, the goodwill associated therewith, or Franchisor's interest therein; (ii) if Area Developer fails to comply with the Development Schedule; (iii) if any of the Franchise Agreements or any other agreement between Area Developer and Franchisor or its Affiliates are terminated due to a Default by Area Developer; (iv) if any purported assignment or transfer of any direct or indirect interest in this Agreement, in the Dog Haus Restaurants, or in all or substantially all of Area Developer's assets is made to any third party by Area Developer or an Owner without Franchisor's prior written consent; (v) if any transfer of the equity ownership interests of Area Developer or an Owner is made to any third party without Franchisor's prior written consent; (vi) if Area Developer or an Owner discloses or divulges the contents of Franchisor's Manuals, Dog Haus Trade Secrets or other Dog Haus Confidential Information provided to Area Developer by Franchisor; (vii) if an approved Assignment, as required by Section 9.5, is not effected within the time provided following death or incapacity of an Owner; (viii) if Area Developer or an Owner fails to comply with the covenants in Article 13 or fails to obtain execution of and deliver the covenants required under Section 13.7; (ix) if Area Developer or an Owner has made any material misrepresentations in connection with their application to Franchisor for the development rights granted by this Agreement; (x) if Area Developer or an Owner, after curing a Default pursuant to Section 11.3, commits the same, similar, or different Default, whether or not cured after notice; (xi) if any Owner fails or refuses to deliver to Franchisor, within ten (10) days after Franchisor's written request, a Guarantee in substantially the form attached to this Agreement as Exhibit C and current financial statements as may from time to time be requested by Franchisor; (xii) if Area Developer, an Owner or an Affiliate fails to comply with any or all of the terms of this Agreement, or any other agreement between Franchisor, or its Affiliates, and Area Developer or an Owner beyond the applicable cure period; (xiii) upon a Default of Area Developer's obligations under this Agreement or any other agreement between Area Developer and Franchisor, which by its nature is not capable of being cured by Area Developer; (xiv) if funding promised or otherwise represented to be made available to Area Developer or its Owners on the condition that Area Developer sign this Agreement is not made available to Area Developer or its Owners within ten (10) business days after Area Developer signs this Agreement; (xv) if, in Franchisor's Business Judgment, Franchisor has grounds to believe that Area Developer or any of its Owners, officers, directors, or key employees has engaged or attempted to engage, through one or more affirmative acts or a failure to act, in any fraudulent, dishonest, unethical, immoral, or similar conduct in connection with Area Developer's development of Dog Haus Restaurants, whether such conduct is directed at or reasonably expected to impact Area Developer's development of Dog Haus Restaurants, the System, the Franchisor or its Affiliates, suppliers, other area developers, or another third party; or (xvi) if, in Franchisor's Business Judgment, Franchisor has grounds to believe that Area Developer or any of its Owners, officers, or directors has engaged in any lewd or immoral conduct, whether or not in connection with Area Developer's development of Dog Haus Restaurants.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, there are numerous conditions that constitute a 'Default' under the Area Developer Agreement. These defaults can trigger termination of the agreement without opportunity to cure.
Some of these 'Defaults' include criminal convictions of the Area Developer or an Owner (felony or crime involving moral turpitude), failure to comply with the Development Schedule, termination of any Franchise Agreements or other agreements with Dog Haus due to a Default, unauthorized assignment or transfer of interests in the agreement or Dog Haus Restaurants, unauthorized transfer of equity ownership interests, and disclosure of confidential information like the contents of Dog Haus's manuals or trade secrets.
Additional 'Defaults' include failure to effect an approved assignment after the death or incapacity of an Owner, non-compliance with covenants, material misrepresentations in the application for development rights, committing the same or similar Default after curing a previous one, failure to provide a guarantee or financial statements upon request, failure to comply with any terms of the agreement or other agreements with Dog Haus beyond the cure period, and any obligation that cannot be cured.
Finally, 'Defaults' can also include failure to secure promised funding, engaging in fraudulent, dishonest, unethical, or immoral conduct, or engaging in lewd or immoral conduct. Dog Haus retains broad discretion to determine if these defaults have occurred based on its business judgment.