What events trigger the post-term non-compete obligations for a Dog Haus franchisee?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.3 Non-Competition After Expiration or Termination of Agreement.
Except as Franchisor otherwise approves in writing, commencing upon the date of (i) an Assignment permitted under Article 14, (ii) the Expiration Date of this Agreement, (iii) the termination of this Agreement (regardless of the cause for
termination), 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 this Section 15.3, and continuing for an uninterrupted period of two (2) years thereafter, Franchisee and each Owner shall not, own (either beneficially or of record), engage in or render services to, whether as an investor, partner, lender, director, officer, manager, employee, consultant, representative or agent, any Competitive Business located at the Franchised Location or within two (2) miles of the Franchised Location or any other Dog Haus Restaurants; provided, however, the restrictions stated in this Section 15.3 shall not apply to any Owner after two (2) years from the date the Owner ceases to be an officer, director, shareholder, member, manager, trustee, owner, general partner, employee or otherwise associated in any capacity with Franchisee.
- 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, the post-term non-compete obligations are triggered by several events. These include (1) an assignment permitted under Article 14 of the agreement, (2) the expiration date of the franchise agreement, (3) the termination of the agreement (regardless of the cause), or (4) a final court order after all appeals have been exhausted. Upon the occurrence of any of these events, the franchisee and each owner are subject to a non-compete agreement for two years.
During this two-year period, the franchisee and owners are restricted from owning, engaging in, or rendering services to any Competitive Business. This restriction applies whether they act as an investor, partner, lender, director, officer, manager, employee, consultant, representative, or agent. The non-compete applies to businesses located at the franchised location or within two miles of the franchised location or any other Dog Haus restaurant.
However, there is an exception: the restrictions do not apply to any owner after two years from the date they cease to be associated with the franchisee in any capacity (officer, director, shareholder, etc.). If a franchisee or restricted person violates the non-compete agreement, they must pay Dog Haus five percent of the revenue derived from the Competitive Business throughout the 24-month period, in addition to any other remedies available to Dog Haus.