After Dog Haus franchisor approval of a site, what is the franchisee's next obligation?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
Once Franchisee has identified the new Franchised Location, Franchisor has approved it, and the Lease has been submitted to Franchisor to allow Franchisor at least fifteen (15) days to confirm that the provisions set forth in Section 5.2 have been included in the proposed Lease and that the Landlord and Franchisee have executed an Option to Obtain Lease Assignment in the form specified by Franchisor, Franchisor will prepare an addendum to Exhibit A and provide it to Franchisee.
If Franchisee fails to secure the new Franchised Location within twelve (12) months of the date of Franchisor's approval of the new Franchised Location, Franchisor shall have the right to estimate and bill Franchisee for Royalty Fees for the time period following the expiration of the twelve (12) month period based upon the Royalty Fees received for the Franchised Restaurant during the identical periods of the last preceding
calendar year plus an additional ten percent (10%) of such amount or, if the Franchised Restaurant was not in operation during the identical period of the last preceding year, based upon the average Royalty Fees paid during the number of months the Franchised Restaurant was in operation plus an additional ten percent (10%) of that amount.
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, after the franchisor approves the new franchised location, the franchisee must submit the lease to Dog Haus. This allows Dog Haus at least fifteen (15) days to confirm that the provisions set forth in Section 5.2 have been included in the proposed Lease and that the Landlord and Franchisee have executed an Option to Obtain Lease Assignment in the form specified by Franchisor. Dog Haus will then prepare an addendum to Exhibit A and provide it to the franchisee.
This step is crucial because it ensures that the lease agreement aligns with Dog Haus's requirements and protects the franchisor's interests. The 15-day review period allows Dog Haus to verify essential lease provisions and confirm that the franchisee has secured an option to obtain a lease assignment, which is a standard practice in franchising to safeguard the brand's location. Exhibit A likely contains specific requirements or standards that the location must meet to be suitable for a Dog Haus franchise.
Furthermore, if the franchisee fails to secure the new franchised location within twelve (12) months of the franchisor's approval, Dog Haus has the right to estimate and bill the franchisee for Royalty Fees. These fees will be based on the Royalty Fees received for the Franchised Restaurant during the identical periods of the last preceding calendar year plus an additional ten percent (10%) of such amount. If the Franchised Restaurant was not in operation during the identical period of the last preceding year, the fees will be based upon the average Royalty Fees paid during the number of months the Franchised Restaurant was in operation plus an additional ten percent (10%) of that amount. This clause incentivizes the franchisee to promptly finalize the lease and begin operations, as delays can result in financial penalties.
In summary, the franchisee's immediate next step after site approval is to submit the lease to Dog Haus for review, ensuring compliance with specified provisions and securing the option to obtain a lease assignment. Failure to secure the location within twelve months can lead to estimated Royalty Fees, highlighting the importance of timely action.